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Valaris (VAL)
NYSE:VAL
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Valaris
(NYSE:VAL)62Neutral
Valaris (VAL) vs. S&P 500 (SPY)
Market Cap
$2.47B
Dividend YieldN/A
Average Volume (3M)2.18M
Price to Earnings (P/E)7.3
Beta (1Y)0.93
Revenue Growth32.42%
EPS Growth-56.26%
CountryUS
Employees4,261
SectorEnergy
Sector Strength57
IndustryFossil Fuels
Share Statistics
EPS (TTM)5.14
Shares Outstanding71,032,295
10 Day Avg. Volume3,261,917
30 Day Avg. Volume2,182,924
Financial Highlights & Ratios
PEG Ratio0.00166
Price to Book (P/B)N/A
Price to Sales (P/S)1.09
Price to Cash Flow (P/CF)3.20
P/FCF Ratio4.80
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$49.00Price Target Upside31.05% Upside
Rating ConsensusHold
Number of Analyst Covering5
Valaris Business Overview & Revenue Model
Company DescriptionValaris Limited (VAL) is a leading offshore drilling contractor, serving the global oil and gas industry. The company operates a high-quality fleet of modern offshore drilling rigs, including drillships, semisubmersible rigs, and jackup rigs. Valaris provides comprehensive drilling services to major international oil companies, national oil companies, and independent operators worldwide, delivering safe and efficient drilling solutions across various offshore environments.
How the Company Makes MoneyValaris makes money primarily through contracts for offshore drilling services. The company generates revenue by leasing its fleet of drilling rigs to oil and gas companies, which pay day rates for the use of these rigs. The contracts may vary in length, with some spanning months to years, providing a steady stream of income. Valaris's earnings are influenced by factors such as the utilization rates of its rigs, the prevailing day rates in the market, and the overall demand for offshore drilling services. Additionally, the company may engage in partnerships or joint ventures that can contribute to its revenue streams, although specific details of such arrangements are subject to change based on market conditions and strategic decisions.
Valaris Financial Statement Overview
Summary
Valaris demonstrates a robust recovery with improved profitability and operational efficiency. The balance sheet shows reduced leverage and a strong equity position, while cash flow improvements highlight a positive trajectory. However, the fossil fuels industry remains challenging, with historical losses and capital intensity posing potential risks.Income Statement
Valaris has shown a strong recovery with a significant increase in total revenue from TTM (Trailing-Twelve-Months) compared to the previous year (32.4% growth rate). The gross profit margin improved to 39.3% from 7.8%, and net profit margin also turned positive at 15.8% after a previous negative figure. EBIT and EBITDA margins have strengthened, reflecting improved operational efficiency. However, past volatility and losses indicate potential risks.75
Positive
Balance Sheet
The company's balance sheet reflects a solid equity position with an equity ratio of 50.8%. The debt-to-equity ratio has improved to 0.48, indicating reduced leverage risk. ROE stands at 16.6%, showcasing effective use of equity. While improvements are evident, the industry remains capital intensive, which could challenge future financial stability.68
Positive
Cash Flow
Valaris' cash flow has improved, with positive operating cash flow and reduced negative free cash flow. Free cash flow growth rate is notable, although still negative, and operating cash flow to net income ratio is 0.95, suggesting good cash generation relative to earnings. However, negative free cash flow and historical fluctuations suggest caution.60
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 2.36B | 1.78B | 1.60B | 1.23B | 1.43B | Gross Profit |
| 2.36B | 139.50M | 128.10M | -66.00M | -584.00M | EBIT |
| 352.30M | 53.50M | 307.10M | -902.00M | -4.33B | EBITDA |
| 577.10M | 254.20M | 361.40M | -4.18B | -4.26B | Net Income Common Stockholders |
| 373.40M | 865.40M | 176.50M | -4.49B | -4.86B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 368.20M | 620.50M | 724.10M | 608.70M | 325.80M | Total Assets |
| 4.42B | 4.32B | 2.86B | 2.61B | 12.87B | Total Debt |
| 1.08B | 1.16B | 551.80M | 545.30M | 15.70M | Net Debt |
| 714.50M | 534.90M | -172.30M | -63.40M | -310.10M | Total Liabilities |
| 2.18B | 2.33B | 1.56B | 1.55B | 8.50B | Stockholders Equity |
| 2.24B | 1.99B | 1.30B | 1.06B | 4.37B |
| Cash Flow | Free Cash Flow | |||
| -99.70M | -428.60M | -79.50M | -124.90M | -345.50M | Operating Cash Flow |
| 355.40M | 267.50M | 127.50M | -66.00M | -251.70M | Investing Cash Flow |
| -452.30M | -665.80M | -16.70M | -3.70M | -42.00M | Financing Cash Flow |
| -158.30M | 285.50M | -6.40M | 388.70M | 522.20M |
Valaris Technical Analysis
Negative
37.39
Price Trends
44.01
Negative
45.92
Negative
56.47
Negative
Market Momentum
-3.07
Positive
40.07
Neutral
38.80
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For VAL, the sentiment is Negative. The current price of 37.39 is below the 20-day moving average (MA) of 40.65, below the 50-day MA of 44.01, and below the 200-day MA of 56.47, indicating a bearish trend. The MACD of -3.07 indicates Positive momentum. The RSI at 40.07 is Neutral, neither overbought nor oversold. The STOCH value of 38.80 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for VAL.
Valaris Peers Comparison
Overall Rating
UnderperformOutperform
Sector (57)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
67 Neutral | $1.51B | 3.92 | 15.12% | ― | -7.79% | 57.21% | |
62 Neutral | $559.40M | 6.94 | 8.30% | 11.20% | 38.38% | ― | |
62 Neutral | $2.47B | 7.28 | 17.67% | ― | 32.42% | -56.26% | |
57 Neutral | $8.34B | 5.35 | -5.98% | 7.29% | 0.20% | -69.45% | |
52 Neutral | $2.43B | ― | -4.95% | ― | 24.44% | 53.99% |
* Energy Sector Average
Performance Comparison
VAL
Valaris
37.39
-31.98
-46.10%
RIG
Transocean
3.04
-2.39
-44.01%
BORR
Borr Drilling
2.41
-4.00
-62.40%
SDRL
Seadrill Limited
25.02
-21.93
-46.71%
Valaris Earnings Call Summary
Earnings Call Date: Feb 19, 2025 | % Change Since: -12.68% | Next Earnings Date: May 6, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted strong operational performance, safety achievements, and a positive contracting outlook for future years, while acknowledging current challenges such as reduced EBITDA, rig retirements, and expected idle time for some rigs, indicating a balanced view of achievements and challenges.Highlights
Strong Revenue Efficiency
Valaris Limited delivered fleet-wide revenue efficiency of 96% during the fourth quarter and 97% for the full year 2024, marking an improvement over last year's results.
Outstanding Safety Performance
Valaris Limited achieved improvements in key safety metrics and received safety awards from both the IADC and the Center for Offshore Safety, including recognition for three rigs in Brazil with no recordable incidents.
Positive Contracting Outlook
The contracting outlook for 2026 and beyond is strong for high specification assets, with a robust pipeline of deepwater project approvals expected in 2026 and 2027.
Financial Performance and Shareholder Returns
Valaris Limited generated $13 million in free cash during the fourth quarter and returned all free cash flow to shareholders through share repurchases in the second half of the year.
Successful High-Grade Fleet Strategy
Valaris Limited has retired a total of twelve floaters over the past five years, more than any other offshore driller, focusing on high specification assets with a go-forward fleet of fifteen floaters.
Contract Backlog Growth in Jackup Segment
Valaris Limited grew contract backlog for the jackup segment by more than 75% over the past two years, with expectations for year-over-year growth in operating days and average day rates in 2025.
Lowlights
Decline in Adjusted EBITDA
Adjusted EBITDA was $142 million in the fourth quarter, down from $150 million in the third quarter, primarily due to lower utilization for the floater fleet and higher contract drilling expenses from a legal matter.
Retirement of Semisubmersibles
Valaris Limited announced plans to retire three semisubmersibles, including one active rig, due to limited contract opportunities and economic considerations.
Idle Time for High Specification Rigs
Some high specification drillships are expected to have idle time in 2025 due to limited number of programs commencing in the year and competitive market conditions.
Lower Floater Utilization Expected
Total revenues in 2025 are expected to decline compared to 2024, primarily due to lower floater utilization as several rigs are expected to have idle time after completing contracts.
CapEx Increase for 2025
Full-year 2025 capital expenditures are expected to range from $350 million to $390 million, an increase compared to 2024, due to maintenance and upgrade work.
Company Guidance
During the Valaris Limited Fourth Quarter 2024 Results Conference Call, the company provided guidance focused on its financial and operational performance. Valaris achieved a revenue efficiency of 96% for the quarter and 97% for the full year, marking the fourth consecutive year with at least 96% efficiency. Adjusted EBITDA for the fourth quarter was $142 million, a slight decrease from $150 million in the third quarter, primarily due to higher contract drilling expenses related to a non-cash legal matter accrual. The company generated $13 million in free cash flow during the fourth quarter and $111 million in the third quarter, all of which was returned to shareholders through share repurchases. Valaris projected full-year 2025 revenues of $2.15 billion and adjusted EBITDA between $480 million and $580 million. Total capital expenditures for 2025 are expected to range from $350 million to $390 million, with a net cash impact of $275 million to $315 million after customer contributions. The company remains focused on securing long-term contracts for its high-specification fleet, with a strong contracting outlook for 2026 and beyond.Valaris Corporate Events
Business Operations and StrategyFinancial Disclosures
Valaris Announces Fleet Status Updates and New Contracts
Neutral
Feb 18, 2025
Valaris Limited announced updates to its fleet status as of February 18, 2025, including new contracts and extensions worth approximately $120 million since the previous report on October 30, 2024. Notably, the company’s contract backlog decreased from $4.1 billion to approximately $3.6 billion. Valaris secured significant contract extensions, including a 600-day extension with TotalEnergies in the UK North Sea, and new contracts with BP offshore Trinidad and Jadestone Energy in Australia. The company also made strategic fleet adjustments by retiring three semisubmersibles and selling a jackup rig, reflecting a focus on optimizing their operational fleet.
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.