Borr Drilling (BORR) is back in focus after announcing fresh contract commitments and extensions for four premium jack up rigs across West Africa, the Americas, Europe, and Southeast Asia, expanding its contracted backlog.

At a latest share price of US$5.83, Borr Drilling has seen a 46.5% 90 day share price return and a very large 1 year total shareholder return, suggesting momentum has been building alongside recent contract awards and fleet expansion news.

If rig contracts and offshore activity are on your radar, it may be worth scanning other names benefiting from energy infrastructure demand with the 28 power grid technology and infrastructure stocks

With the shares now sitting almost in line with the average analyst price target and a very large 1 year total return already on the table, is Borr Drilling still underappreciated value, or is the market already pricing in future growth?

Most Popular Narrative: 10% Undervalued

With Borr Drilling last closing at $5.83 against a narrative fair value of $5.84, the prevailing view sees modest upside anchored in specific growth and margin assumptions.

The valuation seems to price in that Borr Drilling's strong recent contract momentum, particularly in Mexico, the Middle East, and Southeast Asia, will translate into persistently high day rates and utilization, and this view may underestimate the lingering risks from oversupply in the jack up market and the increased volume of transitional or short duration contracts, which could compress both future revenues and margins if the anticipated demand does not fully materialize.

Curious what kind of revenue growth, margin lift, and future P/E multiple need to line up for that fair value to hold up? The narrative is based on positive earnings projections, rising profitability and a richer earnings multiple than the wider energy services group. The full write up spells out which assumptions carry the most weight in this pricing story.

Result: Fair Value of $5.84 (UNDERVALUED)

However, that upside view could be challenged if jack up oversupply reduces day rates or if higher leverage and refinancing costs reduce future earnings.

Another View: Rich Multiples Raise A Different Question

The narrative fair value points to modest undervaluation, but the current P/E of 39.9x tells a different story. It sits well above the US Energy Services industry at 26x, the peer average at 13.2x, and even the fair ratio estimate of 22.7x. This suggests there is less room for error if expectations slip.

For a closer look at how that gap between today’s P/E, peers, and the fair ratio could resolve over time, See what the numbers say about this price — find out in our valuation breakdown.

Next Steps

With sentiment this mixed, it helps to look past headlines and test the data for yourself, then weigh both sides with the 2 key rewards and 3 important warning signs

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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.