Value
8.5/10data confidence 83%| Component | Sub-score |
|---|---|
| P/S | 9.1 |
| EV/EBITDA | 6.8 |
| Fwd P/E | 9.1 |
| PEG | 10.0 |
| Analyst target | 7.5 |
- ▸Forward P/E: 11.6x
- ▸PEG: 0.03
- ▸Attractively valued
SDRL · Why this verdict
Why Seadrill (SDRL) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.2/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
RSI has fallen to 22 — deeply oversold — with the price near the Bollinger lower band and a high volume spike, creating a classic short-term mean reversion setup with 15.8% upside to the analyst target of $49.09 from the current $42.39. V9 | Price rises above $48, more than 13% above the current $42.39, within 90 days as the oversold condition resolves. | →Stable |
| CounterDeeply oversold readings in below-minimum quality stocks often precede continued decline rather than mean reversion; RSI of 22 can persist for months in a fundamentally deteriorating situation. | ||
Analysts are targeting $49.09 against the current price of $42.39, representing 15.8% upside with a risk-to-reward ratio of 4.05 based on the technical stop loss level, and 7 analysts cover the stock with a positive consensus. Targets | Stock price reaches $49, more than 15% above the current $42.39, within 12 months as offshore drilling demand improves. | →Stable |
| CounterThe analyst consensus upside has been persistently positive without the stock being able to sustain gains given consecutive earnings misses; analyst targets may lag the deteriorating fundamental reality. | ||
The company missed earnings estimates in 3 of the last 4 quarters with an average negative surprise of -111.8%, including a -283% and -140% miss in the two prior quarters, indicating that contract wins and day rates are being consistently overestimated by analysts. Earnings | EPS surprise rises above 0% in at least 2 of the next 4 quarters, confirming that day rate and utilization assumptions have been sufficiently reduced. | →Stable |
| CounterThe most recent quarter showed a 71.2% positive surprise where actual EPS of -$0.08 beat the estimate of -$0.27, suggesting the negative estimate reset may already be underway and future beats are more likely. | ||
Business quality is below the minimum investability threshold at 3.3 out of 10, with near-zero return on equity and net margins, reflecting that the company is not generating meaningful economic profits at current day rates and fleet utilization levels. Bear case | Quality score improves above 4.0 within 12 months as drilling day rates recover and fleet utilization rises above current levels. | →Stable |
| CounterOffshore drilling companies typically operate at low margins in rate troughs and can generate very high returns when day rates recover; the current below-minimum quality reflects the trough, not the through-cycle business quality. | ||
RSI has fallen to 22 — deeply oversold — with the price near the Bollinger lower band and a high volume spike, creating a classic short-term mean reversion setup with 15.8% upside to the analyst target of $49.09 from the current $42.39.
→StableV9
- Expectation
- Price rises above $48, more than 13% above the current $42.39, within 90 days as the oversold condition resolves.
CounterDeeply oversold readings in below-minimum quality stocks often precede continued decline rather than mean reversion; RSI of 22 can persist for months in a fundamentally deteriorating situation.
Analysts are targeting $49.09 against the current price of $42.39, representing 15.8% upside with a risk-to-reward ratio of 4.05 based on the technical stop loss level, and 7 analysts cover the stock with a positive consensus.
→StableTargets
- Expectation
- Stock price reaches $49, more than 15% above the current $42.39, within 12 months as offshore drilling demand improves.
CounterThe analyst consensus upside has been persistently positive without the stock being able to sustain gains given consecutive earnings misses; analyst targets may lag the deteriorating fundamental reality.
The company missed earnings estimates in 3 of the last 4 quarters with an average negative surprise of -111.8%, including a -283% and -140% miss in the two prior quarters, indicating that contract wins and day rates are being consistently overestimated by analysts.
→StableEarnings
- Expectation
- EPS surprise rises above 0% in at least 2 of the next 4 quarters, confirming that day rate and utilization assumptions have been sufficiently reduced.
CounterThe most recent quarter showed a 71.2% positive surprise where actual EPS of -$0.08 beat the estimate of -$0.27, suggesting the negative estimate reset may already be underway and future beats are more likely.
Business quality is below the minimum investability threshold at 3.3 out of 10, with near-zero return on equity and net margins, reflecting that the company is not generating meaningful economic profits at current day rates and fleet utilization levels.
→StableBear case
- Expectation
- Quality score improves above 4.0 within 12 months as drilling day rates recover and fleet utilization rises above current levels.
CounterOffshore drilling companies typically operate at low margins in rate troughs and can generate very high returns when day rates recover; the current below-minimum quality reflects the trough, not the through-cycle business quality.
TrendMatrix Research · core thesis
Engine thesis — one sentence
Seadrill is an offshore drilling contractor with a compelling 33% analyst upside and an oversold RSI of 22 near Bollinger lower band support, but the company has missed earnings in 3 of 4 recent quarters and carries below-minimum business quality, reflecting a speculative recovery setup rather than a high-conviction investment.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
3.3/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 0.0 |
| ROA | 0.8 |
| Gross margin | 2.2 |
| Op margin | 2.9 |
| Net margin | 0.0 |
| Current ratio | 6.8 |
| Moat | 5.1 |
| Piotroski F | 8.9 |
- ▸No competitive moat
- ▸Strong Piotroski F-Score: 8/9
Growth
4.7/10data confidence 33%| Component | Sub-score |
|---|---|
| Rev growth | 4.7 |
Momentum
5.2/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 8.1 |
| MACD | 7.2 |
| OBV | 6.3 |
| MA position | 4.0 |
| Volume | 0.3 |
- ▸Uptrend pullback (RSI 34) - buy opportunity
- ▸Above 200-day MA
Sentiment
7.6/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 6.8 |
| Price target | 9.2 |
| erm sentiment | 6.9 |
- ▸Light analyst coverage (8.0) — signal dampened
- ▸Analyst upside: 41%
Insider
3.4/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 3.0 |
| insider conviction | 2.0 |
| holder change | 5.1 |
- ▸Notable insider selling — $5,443,142 (0.218% of mkt cap)
Peer rank
4.2/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 2.2 |
| quality rank | 2.8 |
| growth rank | 6.7 |
Technical
5.7/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 6.2 |
| support resistance | 7.2 |
| 52w position | 4.4 |
| gap | 5.0 |
Risk (lower is worse)
4.6/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 6.4 |
| days to cover | 3.9 |
| volatility | 1.2 |
| put call | 4.2 |
| implied vol | 2.3 |
| beta | 5.3 |
| debt equity | 9.1 |
- ▸High IV: 66%
Catalyst
3.1/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 7.5 |
| earnings history | 0.0 |
| earnings timing | 5.0 |
| surprise avg | 0.0 |
- ▸Earnings concerns: 1B/3M
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCKPassed (7)
- MOMENTUM:5.2>=4.5
- ASYMMETRY:2.5>=1.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:32d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (0)
none
Warning (2)
- MOMENTUM:5.2<5.5 (soft — BUY_NOW allowed but watch)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
2.51
Upside
+22.7%
Downside
9.1%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilityAggressive — Beta 1.41>1.3, MCap $2.5B<$5B
Investment implication
The L1 gate blocked the positive-verdict path: a hard-floor threshold was breached, so dimensional pillars — including Value at 8.5 could not lift the engine output above the verdict floor.
The strongest dimensions are Value at 8.5, Sentiment at 7.6, and Technical at 5.7; the weakest are Catalyst at 3.1, Quality at 3.3, and Insider at 3.4. The V9 engine cleared all gates with 2 warnings, producing an asymmetric reward-to-risk of 2.51 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Oversold Technical Bounce Setup
Trip ifPrice falls below $38, more than 10% below the current $42.39, indicating the oversold bounce has failed and the downtrend is continuing.
- P2Analyst Upside Significant
Trip ifAnalyst consensus price target drops below $38, lower than the current price of $42.39, signaling analysts have reduced expectations materially.
- P3Consecutive Earnings Miss Streak
Trip ifEPS surprise falls below -50% in at least 2 of the next 4 quarters, indicating the miss streak has resumed despite the recent positive beat.
- P4Quality Below Minimum Threshold
Trip ifQuality score remains below 3.0 for more than 3 consecutive quarters, indicating no improvement in operating margins or return metrics.