Reviewing Borr Drilling (NYSE:BORR) & Seadrill (NYSE:SDRL)

Seadrill (NYSE:SDRL) and Borr Drilling (NYSE:BORR) are both small-cap energy companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, earnings, analyst recommendations, dividends, risk, profitability and institutional ownership.

Analyst Ratings

This is a summary of recent recommendations for Seadrill and Borr Drilling, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Seadrill	0	0	4	0	3.00
Borr Drilling	0	0	1	0	3.00

Seadrill currently has a consensus price target of $50.75, suggesting a potential upside of 109.45%. Borr Drilling has a consensus price target of $9.00, suggesting a potential upside of 407.04%. Given Borr Drilling’s higher probable upside, analysts plainly believe Borr Drilling is more favorable than Seadrill.

Earnings and Valuation

This table compares Seadrill and Borr Drilling”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Seadrill	$1.39 billion	1.09	$300.00 million	$5.29	4.58
Borr Drilling	$1.01 billion	0.42	$22.10 million	$0.32	5.55

Seadrill has higher revenue and earnings than Borr Drilling. Seadrill is trading at a lower price-to-earnings ratio than Borr Drilling, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Seadrill and Borr Drilling’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Seadrill	27.79%	7.24%	5.12%
Borr Drilling	8.12%	8.27%	2.51%

Volatility and Risk

Seadrill has a beta of 1.48, indicating that its share price is 48% more volatile than the S&P 500. Comparatively, Borr Drilling has a beta of 1.77, indicating that its share price is 77% more volatile than the S&P 500.

Institutional and Insider Ownership

95.7% of Seadrill shares are owned by institutional investors. Comparatively, 83.1% of Borr Drilling shares are owned by institutional investors. 0.2% of Seadrill shares are owned by insiders. Comparatively, 7.9% of Borr Drilling shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Dividends

Seadrill pays an annual dividend of $4.00 per share and has a dividend yield of 16.5%. Borr Drilling pays an annual dividend of $0.10 per share and has a dividend yield of 5.6%. Seadrill pays out 75.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Borr Drilling pays out 31.3% of its earnings in the form of a dividend.

Summary

Seadrill beats Borr Drilling on 9 of the 15 factors compared between the two stocks.

About Seadrill

Seadrill Ltd. engages in the provision of offshore drilling services to the oil and gas industry. It operates through the following segments: Floaters, Jack-up rigs, and Other. The Floaters segment encompasses drilling, completion, and maintenance of offshore exploration and production wells. the Jack-up Rigs segment includes drilling contracts relate to jack-up rigs for operations in harsh and benign environments in shallow water. The Other segment represents management services to third parties and related parties. The company was founded on May 10, 2005 and is headquartered in Hamilton, Bermuda.

About Borr Drilling

Borr Drilling Limited operates as an offshore shallow-water drilling contractor to the oil and gas industry worldwide. The company owns, contracts, and operates jack-up drilling rigs for operations in shallow-water areas, including the provision of related equipment and work crews to conduct oil and gas drilling and workover operations for exploration and production. It serves oil and gas exploration and production companies, such as integrated oil companies, state-owned national oil companies, and independent oil and gas companies. The company was formerly known as Magni Drilling Limited and changed its name to Borr Drilling Limited in December 2016. Borr Drilling Limited was incorporated in 2016 and is based in Hamilton, Bermuda.