SDRL

The screen-friendly 6.1x P/E is built on stale FY2024 diluted EPS of $6.37 — and FY2024 is gone. In FY2025 Seadrill swung to a net loss of -$77.0M (from +$446M a year earlier), operating income collapsed 88.6% to $47M, and operating cash flow turned negative at -$28.0M. On current results the stock is not cheap; it is a loss-maker. Revenue did grow +7.9% to $1.09B, but the MD&A explains why earnings fell anyway: 2025 was 'a year marked by softer utilization and a corresponding increase in competition, placing downward pressure on near-term dayrates,' with Brent averaging $68/bbl (down from $80) and customers deferring offshore capex. With only 10 of 15 owned rigs operating and three cold-stacked, this is a cyclical at a trough, not a compounder.

What keeps this a hold rather than a sell is the balance sheet and asset backing. Stockholders' equity is $2.86B against a market cap of just $2.42B — the stock trades meaningfully below book (~$45.8/share of equity vs. a $38.68 price), and below its 15-rig fleet's carrying value. Long-term debt is modest at $613M against $339M cash and a healthy 2.0x current ratio ($758M / $374M), so there is no near-term solvency stress and the company can survive the downcycle. The asset value and discount-to-book provide a floor that a deteriorating income statement alone would not.