Seadrill (SDRL) is back in focus after announcing several new offshore contracts worth about $235 million, spanning Malaysia, Norway and Brazil. These agreements have expanded its revenue backlog into 2026 and 2027.

The recent contract wins appear to have caught investors’ attention, with a 7 day share price return of 13.62% and a 90 day share price return of 27.38%. Over the past year, the total shareholder return of 7.90% sits alongside a 3 year total shareholder return decline of 2.66%, suggesting momentum has picked up more recently after a softer longer term experience.

If you are looking beyond offshore drilling for what else is moving, it could be a good time to hunt for opportunities using aerospace and defense stocks.

With new contracts extending visibility into 2027, recent share price gains and an analyst price target above the last close, the key question is whether Seadrill still trades at a discount or whether the market already reflects expectations for future growth.

Most Popular Narrative: 9.3% Undervalued

At a last close of $39.45 versus a narrative fair value of $43.50, Seadrill is framed as undervalued, with the story hinging on offshore activity and margins.

A significant pickup in offshore exploration activity is expected, as major operators like TotalEnergies and BP commit to multi-year, high-volume drilling campaigns, and regulatory changes in the US Gulf and Brazil drive more lease sales. This should directly increase future revenue, fleet utilization, and dayrate potential from late 2026 onward.

Curious what kind of revenue path, margin expansion and earnings profile need to line up to support that valuation gap? The narrative lays out a detailed playbook.

Result: Fair Value of $43.50 (UNDERVALUED)

However, softer utilization with more competition, along with the overhang from legal judgments and unresolved claims, could quickly challenge that undervaluation story if conditions tighten further.

Another View: Rich Multiples Versus Value Story

The narrative fair value of $43.50 and our modelled future cash flow value suggest upside, but the current P/E of 72.4x is far higher than both the peer average of 14.7x and a fair ratio of 52.7x. That gap points to meaningful valuation risk if expectations cool, so which signal do you trust more?

Build Your Own Seadrill Narrative

If you see the numbers differently or prefer to test your own assumptions, you can build a custom Seadrill story in just a few minutes by starting with Do it your way.

A great starting point for your Seadrill research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.

Looking for more investment ideas?

If Seadrill is on your radar, do not stop there. A few targeted stock lists can quickly surface ideas you might otherwise miss.

• Spot potential value setups by scanning these 888 undervalued stocks based on cash flows that line up with the kind of fundamentals you want to back.
• Tap into long term growth themes through these 23 AI penny stocks that are tied to real business models, not just buzzwords.
• Put income potential front and center by checking out these 13 dividend stocks with yields > 3% and see which names match your return goals and risk comfort.

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.