Seadrill (NYSE:SDRL): Revisiting Valuation After Q3 Revenue Beat, Net Loss, and Upgraded 2025 Guidance

Seadrill (NYSE:SDRL) just released its third quarter earnings, reporting higher revenues but a return to a net loss. In addition, the company raised its full year revenue guidance and narrowed its expectations for 2025.

See our latest analysis for Seadrill.

Seadrill’s earnings news comes after a volatile stretch, with shares rising 7.9% over the past week as investors took in the upgraded full-year outlook. However, its share price return is still down 21.7% year-to-date, and the one-year total shareholder return sits at -24%. While there is short-term momentum, the longer-term trend suggests investors are cautious about the road ahead.

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With Seadrill trading well below analyst price targets and recent guidance upgrades on the table, is the market overlooking a potential rebound? Or is future growth already fully reflected in the share price?

Most Popular Narrative: 29.5% Undervalued

With Seadrill’s fair value pegged at $43.50 and a last close of $30.65, the market is still pricing shares significantly below what analysts expect based on future cash flows. The narrative driving this number centers on a potent mix of renewed offshore investment and Seadrill’s high-spec fleet strategy.

A significant pickup in offshore exploration activity is expected, as major operators like TotalEnergies and BP commit to multi-year, high-volume drilling campaigns. Regulatory changes in the US Gulf and Brazil are also driving more lease sales. These factors could directly increase future revenue, fleet utilization, and dayrate potential from late 2026 onward.

Read the complete narrative.

Curious what’s fueling this head-turning valuation? Behind the target price are bold profitability forecasts and a changing industry landscape. Interested in the dramatic financial milestones analysts use to support this projection? The full narrative explores pivotal financial assumptions that could reshape Seadrill’s future.

Result: Fair Value of $43.50 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, challenges such as softer rig utilization and ongoing legal disputes could quickly undermine the bullish outlook for Seadrill’s earnings recovery.

Find out about the key risks to this Seadrill narrative.

Another View: Multiple-Based Valuation Sends a Warning

Looking at Seadrill’s valuation from another angle, its price-to-earnings ratio sits at an elevated 56.2x, which is much higher than both the US Energy Services industry average of 16.6x and the peer average of 11.8x. Even compared to its fair ratio of 49.7x, Seadrill remains pricey. This suggests the market is already factoring in high expectations for future profit growth. Could this represent a valuation risk if growth disappoints?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Seadrill Narrative

If you have a different perspective or want to dig deeper into the numbers, you can quickly craft your own take. Do it your way.

A great starting point for your Seadrill research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.

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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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