• For investors considering whether Borr Drilling at around US$5.70 offers further upside or if expectations are already reflected in the price, a useful starting point is understanding what the current market price implies about value.
• The stock has seen mixed recent returns, with about a 4.5% decline over the last 7 days, a 12.6% gain over 30 days, and a 42.9% gain year to date. The 1 year return of 203.2% contrasts with a 3 year return reflecting a 19.1% decline and a 5 year return of 224.3%.
• Recent trading has been influenced by ongoing sector attention on offshore drilling capacity and capital discipline, as investors reassess which companies might be better positioned within that space. Broader interest in energy services has also kept stocks like Borr Drilling on watchlists, even outside of major company specific headlines.
• Borr Drilling currently records a valuation score of 2/6. A logical next step is to compare what traditional methods such as P/E ratios, asset based metrics, and cash flow models indicate about the price, then finish with a more rounded way to think about value that goes beyond a single framework.

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

Approach 1: Borr Drilling Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model takes estimates of a company’s future cash flows and discounts them back to today using a required rate of return, giving an indication of what the business may be worth on a per share basis.

For Borr Drilling, the 2 Stage Free Cash Flow to Equity model starts with last twelve months free cash flow of about $15.9 million. Analysts provide estimates out to 2027, with free cash flow for that year set at $219.5 million. From 2026 through 2035, Simply Wall St extends this with ten year projections that range from a loss of $111.5 million in 2026 through to $1,177.6 million in 2035, with each year discounted back to today.

Adding these discounted cash flows together leads to an estimated intrinsic value of about $41.32 per share. Against a recent share price close to $5.70, the model suggests the stock trades at an implied 86.2% discount to this DCF estimate. This indicates a wide gap between price and this particular measure of value.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Borr Drilling is undervalued by 86.2%. Track this in your watchlist or portfolio, or discover 57 more high quality undervalued stocks.

Approach 2: Borr Drilling Price vs Earnings

For a profitable company, the P/E ratio is often a useful anchor because it links what you pay per share to the earnings that support that price. Higher expected earnings growth and lower perceived risk generally justify a higher P/E, while slower growth and higher risk usually point to a lower, more cautious “normal” range.

Borr Drilling currently trades on a P/E of about 39.0x, compared with an Energy Services industry average of about 25.9x and a peer average of roughly 12.7x. Simply Wall St’s proprietary “Fair Ratio” for Borr Drilling is 23.6x. This Fair Ratio reflects what the P/E might be expected to look like after accounting for factors such as earnings growth, industry, profit margin, market cap and company specific risks, which makes it a more tailored guide than broad peer or industry comparisons.

Set against the Fair Ratio of 23.6x, the current P/E of 39.0x is higher by a wide margin, which points to the shares trading above this framework’s indication of fair value.

Result: OVERVALUED

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Upgrade Your Decision Making: Choose your Borr Drilling Narrative

Earlier it was mentioned that there is an even better way to understand valuation, so Narratives are introduced here as simple stories that you and other investors create around Borr Drilling. These tie your view of its future revenue, earnings and margins to a forecast and fair value. You can then compare that fair value with the current share price using tools on Simply Wall St's Community page, where Narratives update automatically when fresh news or earnings arrive. Narratives can differ widely. For example, one Borr Drilling Narrative assumes a fair value of US$6.50 built on expectations of revenue growth, margin expansion and a future P/E of about 41.7x. Another assumes a fair value of US$2.80 based on more cautious revenue assumptions, higher discount rates and a lower future P/E of 13.5x. This gives you a clear way to see how different views on the same company lead to different ideas about whether the stock looks expensive or cheap.

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

These give you clear, numbers-based stories on what could justify a higher or lower valuation, so you can decide which set of assumptions feels closer to your own view.

Fair value in this bullish narrative: US$6.50 per share.

Implied discount to this fair value at a US$5.70 share price: around 12.3%.

Assumed annual revenue growth: 8.60%.

• Backlog and margins are built around strong rig demand, limited new supply, and a young premium fleet that is expected to command higher day rates in key regions such as Mexico and Asia.
• Liquidity and balance sheet flexibility are used to support further rig or fleet acquisitions, which are expected to add contracts and broaden revenue over time.
• Key watchpoints include debt levels, receivables concentration, and ESG or regulatory costs, which could affect liquidity and future profitability if they move against the company.

Fair value in this bearish narrative: US$4.00 per share.

Implied premium to this fair value at a US$5.70 share price: around 42.5%.

Assumed annual revenue growth: 1.02%.

• Offshore-focused operations and regional exposure, particularly to Mexico, leave the business sensitive to policy shifts, payment delays, and changes in long term oil and gas spending.
• High leverage, refinancing needs, and past equity raises keep funding costs and dilution risk in focus, especially if credit markets or sector sentiment become less supportive.
• Energy transition pressures, potential day rate softness, and higher compliance costs are seen as ongoing headwinds for margins and the durability of future contracts.

These two narratives frame the current debate around Borr Drilling. Use them as a reference point to stress test your own expectations for contracts, balance sheet risk, and where you think a sensible fair value range sits for the stock.

Do you think there's more to the story for Borr Drilling? 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.