• Investors may be asking whether Valaris, at around US$91.19, still offers value after a strong run, or if most of the upside is already reflected in the price.
• The stock has returned 176.7% over the last year and 74.9% year to date. Over shorter periods, the past month shows a 9.0% decline and the last 7 days a 3.0% gain.
• Recent coverage has focused on Valaris as an offshore drilling company in the Energy Services space. Investor interest has centered on how supply and demand for rigs could influence long-term contract activity and sentiment. This backdrop helps frame the sharp moves in the share price, as the market reassesses both risk and opportunity around the business model.
• Valaris currently has a valuation score of 5 out of 6. This will be unpacked using different valuation approaches, along with a look at a broader way to think about value that goes beyond the headline numbers.

Approach 1: Valaris Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model estimates what a business could be worth today by projecting its future cash flows and discounting them back to a present value using a required rate of return.

For Valaris, the model used is a 2 Stage Free Cash Flow to Equity approach. The latest twelve month free cash flow is around $2.76 million. Analyst inputs and Simply Wall St extrapolations project free cash flow reaching $2,059.78 million in 2035, with interim estimates such as $256.50 million in 2027 and $1,885.01 million in 2034.

After discounting these projected cash flows, the DCF model arrives at an estimated intrinsic value of about $484.90 per share. Compared with the recent share price of around $91.19, this indicates an 81.2% discount, so the stock appears significantly undervalued according to this model.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Valaris is undervalued by 81.2%. Track this in your watchlist or portfolio, or discover 56 more high quality undervalued stocks.

Approach 2: Valaris Price vs Earnings (P/E)

For a profitable company, the P/E ratio is a straightforward way to think about value because it links what you pay for each share directly to the earnings that business is generating today. A higher or lower P/E often reflects what the market is baking in around future growth and risk, with faster growth or lower perceived risk usually supporting a higher “normal” multiple.

Valaris currently trades on a P/E of 6.4x. That sits well below the Energy Services industry average of about 31.0x and also below the peer group average of 25.3x. On the surface, this points to a clear discount relative to both the broader industry and closer comparables.

Simply Wall St’s Fair Ratio for Valaris is 7.7x. This is a proprietary estimate of what a reasonable P/E could be, given factors such as the company’s earnings growth profile, margins, risk characteristics, market value and its place within the Energy Services industry. Because it is tailored to the company, this Fair Ratio can be more informative than a simple comparison with broad industry or peer averages. With the current P/E of 6.4x sitting below the Fair Ratio of 7.7x, the shares appear undervalued on this approach.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your Valaris Narrative

Earlier it was mentioned that there is an even better way to understand valuation. Narratives bring this to life by letting you connect your view of Valaris, such as whether the future looks closer to a Fair Value of about US$98 or closer to US$47, to explicit assumptions for revenue, earnings, margins and P/E. You can then compare that Fair Value with the current price inside Simply Wall St’s Community page. The tool updates automatically as news, earnings or deal terms change, so you can quickly see whether your own buy or sell timing still lines up with the story you believe in.

For Valaris however we'll make it really easy for you with previews of two leading Valaris Narratives:

Fair Value: US$98.00

Implied discount to this Fair Value based on the last close of US$91.19: about 7.0% undervalued.

Revenue growth assumption: 2.94%.

• Assumes the Transocean deal, higher day rates and a US$4.7b backlog help support stronger revenue and cash flow over time, especially from high spec offshore rigs.
• Sees advanced automation, AI driven maintenance and a strengthened balance sheet as key to supporting long cycle projects and potential capital returns.
• Recognises meaningful risks around energy transition, regulation, capital intensity and industry capacity, and encourages you to test the bullish earnings and P/E assumptions against your own view.

Fair Value: US$65.93

Implied premium to this Fair Value based on the last close of US$91.19: about 38.3% overvalued.

Revenue growth assumption: 2.07%.

• Focuses on how the agreed Transocean acquisition terms and existing analyst targets could limit upside for existing shareholders, even with buybacks and a high spec fleet.
• Highlights a strong backlog and tight rig supply, but balances this against concerns around overcapacity, aging assets, client concentration and timing of future contract awards.
• Frames the US$65.93 Fair Value around analyst expectations for earnings, margins, discount rate and future P/E, and suggests the current price sits well above those inputs.

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