Is It Too Late To Consider Subsea 7 After Its Multi Year Share Price Surge?

• If you are wondering whether Subsea 7 still offers good value after a strong multi year run, or if most of the upside is already priced in, you are not alone. That is exactly what we are going to unpack here.
• The stock has cooled slightly in the last week, down about 2.0%, but it is still up 2.9% over 30 days, 3.6% year to date, 18.6% over the last year, and an impressive 114.3% over 3 years and 168.7% over 5 years. This naturally raises questions about what the market is now expecting.
• Recent moves in the share price have been shaped by a steady stream of contract awards and project wins in the offshore energy space, reinforcing the view that Subsea 7 is well positioned for the current investment cycle. At the same time, broader sentiment toward oil, gas, and offshore wind has been shifting, with energy security and transition themes driving fresh investor interest.
• On our simple valuation check list, Subsea 7 scores just 2 out of 6, suggesting the stock screens as undervalued on only a couple of metrics. In the next sections we will dig into different valuation approaches, then finish with an even more useful way to think about what the market might really be pricing in.

Subsea 7 scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Subsea 7 Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model estimates what a company is worth by projecting its future cash flows and discounting them back to today, adjusting for risk and the time value of money.

For Subsea 7, the latest twelve month free cash flow is about $722 million. Analysts and extrapolated estimates point to steady growth, with free cash flow expected to reach around $1.0 billion in 2035 based on a 2 stage Free Cash Flow to Equity model. Simply Wall St uses detailed annual projections for the next decade, then discounts each year back to today to arrive at an intrinsic value per share.

This DCF suggests a fair value of roughly $711 per share, which is about 72.4% above the current market price. On this basis, the stock screens as significantly undervalued and indicates that the market may still be skeptical about how sustainable this cash flow growth will be.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Subsea 7 is undervalued by 72.4%. Track this in your watchlist or portfolio, or discover 901 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Subsea 7.

Approach 2: Subsea 7 Price vs Earnings

For a profitable company like Subsea 7, the Price to Earnings (PE) ratio is a useful way to gauge what investors are willing to pay for each unit of current earnings. A higher PE generally reflects stronger growth expectations or lower perceived risk, while a lower PE can signal slower growth, higher risk, or simply a lack of market enthusiasm.

Subsea 7 currently trades on about 19.9x earnings, which is well above the Energy Services industry average of roughly 6.1x and also ahead of the broader peer group at around 12.7x. On the surface, that premium suggests investors are already paying up for its earnings profile. However, Simply Wall St also calculates a proprietary “Fair Ratio” of 10.4x, which estimates the PE Subsea 7 should trade on after considering its earnings growth outlook, profitability, risk profile, industry and market cap.

This Fair Ratio is more informative than a simple peer or industry comparison because it adjusts for company specific strengths and weaknesses rather than assuming all businesses deserve the same multiple. Comparing the Fair Ratio of 10.4x with the current 19.9x suggests the stock is trading at a meaningful premium to what would be considered fair on this basis.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1444 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Subsea 7 Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, a simple way to connect your view of a company’s story with the numbers behind its future. A Narrative is your explanation of what you think will happen to a business, translated into assumptions for revenue growth, margins, cash flows and ultimately a personal fair value. On Simply Wall St, Narratives sit inside the Community page and guide you to link your story about Subsea 7, or any company, to a structured forecast and a fair value estimate you can compare directly with today’s share price to help inform a decision to buy, hold or sell. These Narratives are dynamic and update as new information, such as earnings or major contract news, comes in, helping you keep your thesis current without rebuilding your model from scratch. For example, one Subsea 7 Narrative might see fair value closer to NOK 156, while another, more optimistic view could justify around NOK 290, each reflecting different expectations for backlog conversion, margins, and offshore wind growth.

Do you think there's more to the story for Subsea 7? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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