• SFL Corporation Ltd. recently released its unaudited interim financial statements for the six months ended June 30, 2025, showing a modest rise in time charter revenues but a substantial drop in drilling contract revenues.
• This mixed performance points to both strengths in SFL’s shipping operations and ongoing challenges in the offshore segment, which could influence future operational stability.
• We’ll examine how a marked decline in drilling contract revenues might influence SFL’s investment thesis and earnings outlook.

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SFL Investment Narrative Recap

To own SFL today, an investor generally needs confidence in the company’s ability to manage both its diversified shipping revenues and challenges from its offshore energy exposure. The recent drop in drilling contract revenues adds some risk to short-term earnings stability but does not materially alter the central catalyst: the core shipping business and its robust, long-term charter backlog remain key drivers, while the risk from underutilized rigs and segment volatility is magnified in the near term.

Among the recent company announcements, the $100 million share repurchase program stands out for its relevance, especially against the backdrop of weak drilling revenues. While this move signals commitment to returning capital to shareholders, it also highlights ongoing management confidence in the core fleet’s value, even as earnings face pressure from the offshore segment.

By contrast, investors should be keenly aware of the ongoing impact extended idle periods for key assets like the Hercules rig can have on...

SFL's outlook projects $742.1 million in revenue and $132.0 million in earnings by 2028. This reflects a 4.5% annual decline in revenue and an earnings increase of $97.7 million from the current $34.3 million.

Uncover how SFL's forecasts yield a $10.18 fair value, a 27% upside to its current price.

Exploring Other Perspectives

Four fair value estimates from the Simply Wall St Community range widely from US$2.59 to US$10.75 per share. While opinions differ, concentration risk from container vessels remains front of mind for many, shaping varied outlooks on SFL’s long-term earnings and business resilience.

Explore 4 other fair value estimates on SFL - why the stock might be worth as much as 34% more than the current price!

Build Your Own SFL Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your SFL research is our analysis highlighting 3 key rewards and 4 important warning signs that could impact your investment decision.
• Our free SFL research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate SFL's overall financial health at a glance.

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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.