Subsea 7 (SUBCY) AI Stock Analysis

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Subsea 7

(OTC:SUBCY)

66Neutral

Subsea 7's strong financial performance and positive earnings call outlook are balanced by technical indicators suggesting a downtrend and valuation metrics indicating fair pricing. Despite operational challenges such as high tax rates and increased depreciation, the company's robust order backlog and growth in the renewables sector provide a solid foundation for future growth. The dividend increase signals management's confidence in the company's prospects, making it an attractive option for investors seeking both growth and income.

Subsea 7 (SUBCY) vs. S&P 500 (SPY)

Market Cap

$3.92B

Dividend Yield4.16%

Average Volume (3M)6.27K

Price to Earnings (P/E)19.7

Beta (1Y)0.99

Revenue Growth14.45%

EPS Growth1264.85%

CountryUS

Employees15,072

SectorEnergy

Sector Strength44

IndustryOil & Gas Equipment & Services

Share Statistics

EPS (TTM)0.68

Shares Outstanding299,600,000

10 Day Avg. Volume9,696

30 Day Avg. Volume6,267

Financial Highlights & Ratios

PEG Ratio0.02

Price to Book (P/B)N/A

Price to Sales (P/S)0.81

Price to Cash Flow (P/CF)N/A

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price TargetN/A

Price Target UpsideN/A

Rating ConsensusN/A

Number of Analyst Covering0

Subsea 7 Business Overview & Revenue Model

Company DescriptionSubsea 7 S.A. (OTC: SUBCY) is a global leader in the delivery of offshore projects and services for the evolving energy industry. The company specializes in engineering, construction, and services focused on the offshore energy sector, particularly in subsea projects. Subsea 7 operates through three main sectors: Subsea and Conventional, Renewables, and Corporate. It offers a wide range of services, including the design, procurement, installation, and commissioning of offshore energy projects.

How the Company Makes MoneySubsea 7 makes money primarily through its contracts for offshore engineering, construction, and installation services in the oil and gas industry. The company's key revenue streams include the execution of Engineering, Procurement, Construction, and Installation (EPCI) contracts, which involve the full lifecycle of a subsea project from design through to completion. Additionally, Subsea 7 generates revenue from its Renewables sector by providing similar services to offshore wind energy projects. The company often works in partnership with major oil and gas companies and renewable energy firms, leveraging its expertise and technology in subsea engineering. Revenue is also driven by its long-term agreements and maintenance contracts, ensuring ongoing relationships with its clients.

Subsea 7 Financial Statement Overview

Summary

Subsea 7 exhibits strong financial health with consistent revenue growth, improved profitability margins, and robust cash flow generation. The balance sheet is solid with a good balance between debt and equity. While there is some increase in debt levels, the company's strong operating performance and cash flow generation mitigate financial risks. Overall, Subsea 7 is well-positioned financially to capitalize on growth opportunities in the fossil fuels industry.

Income Statement

Positive

Subsea 7 has shown consistent revenue growth over the years, with a notable increase from 2023 to 2024. The gross profit margin improved significantly in the latest year, indicating better cost management. Net profit margin and EBIT margin have also improved, reflecting enhanced operational efficiency. A key strength is the robust increase in EBITDA margin, suggesting strong cash flow generation from operations.

Balance Sheet

Positive

The company's debt-to-equity ratio is moderate, indicating a balanced approach to leverage. The return on equity has improved, driven by increased net income, which is a positive sign for shareholders. The equity ratio remains healthy, showing that the company is well-capitalized. However, the overall increase in debt levels over the years warrants careful management to maintain financial stability.

Cash Flow

Positive

Subsea 7 has shown strong free cash flow growth, particularly in the latest year, driven by improved operating cash flows and controlled capital expenditures. The operating cash flow to net income ratio suggests efficient cash generation relative to accounting earnings. The company has maintained a positive free cash flow to net income ratio, underscoring its ability to generate cash flow beyond its accounting profits.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
6.84B	5.97B	5.14B	5.01B	3.47B
	Gross Profit
704.70M	362.80M	397.00M	295.80M	-186.50M
	EBIT
445.50M	166.20M	148.80M	110.20M	-1.03B
	EBITDA
1.09B	680.70M	631.20M	558.60M	-605.00M
	Net Income Common Stockholders
201.40M	15.40M	36.40M	31.80M	-1.11B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
575.30M	726.20M	610.40M	553.10M	480.20M
	Total Assets
7.68B	8.10B	6.94B	6.99B	6.30B
	Total Debt
1.18B	1.30B	613.00M	652.80M	463.00M
	Net Debt
601.60M	577.00M	2.60M	99.70M	-17.20M
	Total Liabilities
3.39B	3.74B	2.49B	2.50B	2.04B
	Stockholders Equity
4.25B	4.32B	4.12B	4.18B	4.23B
Cash Flow		Free Cash Flow
582.70M	78.20M	254.80M	126.50M	264.20M
	Operating Cash Flow
931.40M	660.00M	485.80M	293.00M	446.80M
	Investing Cash Flow
-413.60M	-710.20M	-220.10M	-183.70M	-164.60M
	Financing Cash Flow
-680.20M	151.10M	-211.20M	-22.80M	-157.60M

Subsea 7 Technical Analysis

Technical Analysis Sentiment

Negative

Last Price13.33

Price Trends

50DMA

15.51

Negative

100DMA

15.92

Negative

200DMA

16.51

Negative

Market Momentum

MACD

0.08

Negative

RSI

47.94

Neutral

STOCH

22.53

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SUBCY, the sentiment is Negative. The current price of 13.33 is below the 20-day moving average (MA) of 15.07, below the 50-day MA of 15.51, and below the 200-day MA of 16.51, indicating a bearish trend. The MACD of 0.08 indicates Negative momentum. The RSI at 47.94 is Neutral, neither overbought nor oversold. The STOCH value of 22.53 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SUBCY.

Subsea 7 Peers Comparison

Overall Rating

UnderperformOutperform

Sector (57)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
BKR	82 Outperform	$37.56B	12.75	18.47%	2.27%	9.10%	55.56%
FTI	78 Outperform	$10.53B	13.08	27.06%	0.80%	16.23%	1403.29%
NOV	78 Outperform	$4.48B	7.38	10.12%	2.53%	3.42%	-35.98%
HAL	75 Outperform	$18.16B	7.44	25.14%	3.23%	-0.32%	-3.41%
SLB	72 Outperform	$46.18B	10.93	21.59%	3.27%	9.58%	6.53%
SUBCY	66 Neutral	$3.92B	19.74	4.70%	4.16%	14.45%	1264.85%
Sector *	57 Neutral	$7.56B	4.34	-4.83%	6.50%	-0.19%	-64.60%

* Energy Sector Average

Performance Comparison

SUBCY

Subsea 7

13.33

-2.63

-16.48%

BKR

Baker Hughes Company

37.93

6.22

19.62%

FTI

TechnipFMC

25.03

-0.25

-0.99%

HAL

Halliburton

21.07

-17.13

-44.84%

NOV

11.84

-6.97

-37.05%

SLB

Schlumberger

33.96

-16.38

-32.54%

Subsea 7 Earnings Call Summary

Earnings Call Date: Feb 27, 2025 | % Change Since: -15.85% | Next Earnings Date: Apr 30, 2025

Earnings Call Sentiment Positive

Subsea 7 reported strong growth in EBITDA and a robust order backlog, indicating positive future performance. Significant achievements in the renewables segment and an increased dividend reflect confidence. However, challenges in managing high tax rates, increased depreciation, and foreign exchange losses present notable concerns.

Highlights

Record Full Year EBITDA Growth

Subsea 7 achieved a full year EBITDA of $1,090 million, a 53% increase driven by a 14% top line growth and a 390 basis points margin expansion.

Strong Order Backlog

The company reported a backlog of $11.2 billion at year-end, with robust order intake of $8.2 billion for the full year, up 10% year-on-year.

Renewables Segment Performance

Revenue from renewables was $1.2 billion, up 29% year-on-year, with adjusted EBITDA margins increasing from 10.8% in 2023 to 15% in 2024.

Dividend Increase

The Board proposed a $350 million dividend for 2025, up 40% from the previous year, reflecting confidence in future performance.

Positive Outlook for Brazil and Turkey

Continued strong activity in Brazil and successful completion of Phase 1 in the Sakarya gas development in Turkey, with further phases underway.

Lowlights

High Effective Tax Rate

The effective tax rate was reported at 41%, which is relatively high and expected to moderate to between 40% and 45% in 2025.

Increased Depreciation Costs

An anticipated increase in depreciation to between $700 million and $720 million for 2025, up from $645 million in 2024.

Foreign Exchange Loss

A net foreign exchange loss of $69 million was reported in Q4, driven by currency movements, although this was non-cash and expected to reverse.

Higher Lease Payment Expectations

Expected increase in lease payments for 2025, potentially approaching the upper end of the $200 million range.

Company Guidance

In the recent call, Subsea 7 provided detailed guidance and results for both the fourth quarter and the full fiscal year 2024. The company reported a significant increase in adjusted EBITDA, reaching $1,090 million for the year, up 53%, driven by a 14% rise in revenue and a margin expansion of 390 basis points. They highlighted a robust order intake of $8.2 billion, leading to a backlog of $11.2 billion at year-end, providing over 80% revenue visibility for 2025. Subsea 7 plans to increase its dividend to $350 million, a 40% increase from the previous year, reflecting its confidence in future prospects. For 2025, the company expects revenue between $6.8 billion and $7.2 billion, with an adjusted EBITDA margin ranging from 18% to 20%. Capital expenditure is projected to be between $360 million and $380 million. Additionally, the company noted that the first quarter of 2025 will involve 600 days of planned maintenance across several vessels, which is higher compared to the previous year.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.