Is It Too Late To Consider Seadrill (SDRL) After Its Recent Share Price Surge?

Simply Wall St

Tue, February 17, 2026 at 10:10 AM GMT+9 6 min read

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If you are wondering whether Seadrill at around US$42.66 is offering value or stretching expectations, you are not alone.

The stock has posted returns of 3.6% over the past 7 days, 22.9% over 30 days, 22.1% year to date and 37.0% over the last year. This naturally raises questions about how much optimism is already in the price.

Recent news coverage has largely focused on Seadrill's position within the offshore drilling space and how investors are reassessing companies exposed to energy markets. These headlines provide important context for the recent share price moves, especially for readers weighing the balance between opportunity and risk.

On our checks, Seadrill scores 2 out of 6 on value, as shown in the valuation scorecard. Next, we will look at what standard valuation approaches can and cannot tell you about the stock, before wrapping up with a different way to think about valuation that ties everything together.

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

Approach 1: Seadrill Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model takes estimates of a company’s future cash flows and discounts them back to today’s value, to arrive at an estimate of what the entire business might be worth right now.

For Seadrill, the model used is a 2 Stage Free Cash Flow to Equity approach. The latest twelve month free cash flow is a loss of $100.35 million, so the valuation leans heavily on future projections rather than current cash generation. Analysts provide near term estimates, and Simply Wall St then extrapolates these further out. In this case, projected free cash flow for 2026 is $48.50 million, for 2027 is $262 million and for 2035 is around $2.49 billion, all in US$ terms.

Discounting this stream of projected cash flows results in an estimated intrinsic value of about $615.61 per share. Against the current share price of roughly $42.66, the DCF output implies the stock is about 93.1% undervalued.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Seadrill is undervalued by 93.1%. Track this in your watchlist or portfolio, or discover 54 more high quality undervalued stocks.

SDRL Discounted Cash Flow as at Feb 2026

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

Approach 2: Seadrill Price vs Earnings

For a company that is currently profitable, the P/E ratio is a useful way to think about what you are paying for each dollar of earnings. It effectively combines the market’s view on growth potential and risk into a single number.

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Higher growth expectations or lower perceived risk can justify a higher P/E, while slower growth or higher risk usually points to a lower “normal” multiple. With Seadrill, the current P/E is 78.26x, compared with the Energy Services industry average of 25.04x and a peer average of 19.57x, so the stock is trading on a much richer earnings multiple than these simple benchmarks.

Simply Wall St’s Fair Ratio for Seadrill is 51.05x. This is a proprietary estimate of what a reasonable P/E might be, given factors such as the company’s earnings profile, its industry, profit margins, market cap and key risks. That makes it more tailored than a plain comparison with industry or peer averages, which do not adjust for those company specific characteristics. Setting the Fair Ratio of 51.05x against the actual 78.26x suggests the shares are pricing in more optimism than this framework would imply.

Result: OVERVALUED

NYSE:SDRL P/E Ratio as at Feb 2026

P/E ratios tell one story, but what if the real opportunity lies elsewhere? Start investing in legacies, not executives. Discover our 23 top founder-led companies.

Upgrade Your Decision Making: Choose your Seadrill Narrative

Earlier we mentioned that there is an even better way to think about valuation. On Simply Wall St that starts with Narratives, where you set out your story for Seadrill, link it to specific forecasts for revenue, earnings and margins, and arrive at your own Fair Value that you can compare with the current price to help decide whether to buy, hold or sell.

In practice, a Narrative is a short explanation of what you think is really driving Seadrill, which you then back up with numbers, so your view is not just a hunch but a clear line from business story to financial forecast to valuation.

These Narratives sit inside the Simply Wall St Community page, where millions of investors can share and adjust their views. They update automatically when new data, earnings or news come in, so your Fair Value always reflects the latest information rather than a static one-off model.

For Seadrill, for example, one investor might align with the high Fair Value of about US$74.12, based on stronger growth and margin assumptions. Another might lean toward the more cautious Fair Value of about US$32.00, and Narratives make those different views transparent so you can decide which story, and which set of assumptions, feels closer to your own.

For Seadrill however we will make it really easy for you with previews of two leading Seadrill Narratives:

🐂 Seadrill Bull Case

Fair Value in this bullish Seadrill Narrative: US$74.12 per share

Implied discount to this Fair Value versus the recent US$42.66 share price: about 42.4% undervalued based on that Narrative

Revenue growth assumption in this Narrative: 11.70% a year

Backlog and multi year contracts are central, with recent contract wins and options used to support a case for stronger revenue visibility and higher cash generation.

Higher earnings, wider profit margins and lower future P/E assumptions are tied to analyst expectations, with the Narrative pointing to earnings of US$436.2m and a future P/E of 9.60x by 2028.

Risks such as energy transition, ESG pressures, rig oversupply, aging assets and legal or leverage constraints are acknowledged as factors that could challenge this optimistic outlook.

🐻 Seadrill Bear Case

Fair Value in this bearish Seadrill Narrative: US$32.00 per share

Implied premium to this Fair Value versus the recent US$42.66 share price: about 33.3% overvalued based on that Narrative

Revenue growth assumption in this Narrative: 4.32% a year

Energy transition, renewables adoption and capital moving away from oil and gas are used to question the durability of Seadrill's long term contract pipeline and backlog.

The Narrative links regulatory and ESG costs, aging or idle rigs and potential idle time between contracts to possible pressure on margins, cash flow and earnings stability.

Macroeconomic, political and legal uncertainties in key regions, together with the company’s history of restructuring, are highlighted as constraints on financing flexibility and future shareholder returns.

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

NYSE:SDRL 1-Year Stock Price Chart

_ 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._

Companies discussed in this article include SDRL.

Have feedback on this article? Concerned about the content? Get in touch with us directly._ Alternatively, email editorial-team@simplywallst.com_

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