Update shared on 20 Nov 2025
Fair value Decreased 7.37%Analysts have lowered SFL's fair value estimate to $9.43 from $10.18, citing improved near-term revenue expectations along with more conservative profit margin and valuation assumptions following the latest quarterly results and market conditions.
Analyst Commentary
Analysts have presented a range of perspectives following SFL's recent results and market actions. Observations focus on the company's dividend stability, fleet investments, and near-term growth constraints.
Bullish Takeaways
- Bullish analysts note SFL's quarterly adjusted EBITDA significantly exceeded market expectations. This suggests strong operational performance and execution.
- The maintained quarterly dividend, accounting for a 41% payout of operating cash flow, supports the view that the company offers an attractive yield to investors, currently around 10% on an annualized basis.
- There is $80 million remaining under the company's buyback program, which runs through the second quarter of 2026. This provides additional flexibility for capital returns to shareholders.
- Continued investments in SFL's fleet are seen as a positive sign for longer-term growth and asset value resilience, even as the broader shipping market experiences fluctuations.
Bearish Takeaways
- Bearish analysts caution that SFL did not repurchase any shares during the most recent quarter. This may signal a preference to conserve cash or uncertainty about valuation upside in the near term.
- Soft conditions in the drilling market, along with re-deliveries of vessels, are expected to constrain operating cash flow over the coming quarters.
- While recent metrics have improved, the company's fair value estimate has been revised downward. This reflects persistent questions about profit margin sustainability and growth in a volatile market environment.
- The current strong dividend payout may not be fully secure if further pressures on cash flow emerge, adding a note of caution to the income-focused investment case.
What's in the News
- Between August 19, 2025 and September 30, 2025, SFL repurchased 2,347,752 shares, representing 1.77% of its outstanding shares. The total cost of the buyback was $20.2 million, completing the buyback announced earlier in August 2025 (Key Developments).
Valuation Changes
- Fair Value: Lowered from $10.18 to $9.43, reflecting a more cautious outlook based on recent performance and market dynamics.
- Discount Rate: Decreased from 11.23% to 9.73%. This indicates lower perceived risk or required return for investors.
- Revenue Growth: The negative revenue growth estimate has improved, narrowing from -4.52% to -1.68%.
- Net Profit Margin: Reduced from 17.79% to 13.58%, which points to anticipated pressure on profitability.
- Future P/E Ratio: Increased from 13.68x to 16.07x. This suggests the stock is now valued at a higher multiple of expected earnings.
Disclaimer
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