Critical Review: Valaris (NYSE:VAL) and Noble (NYSE:NE)

Valaris (NYSE:VAL) and Noble (NYSE:NE) are both mid-cap energy companies, but which is the superior business? We will contrast the two businesses based on the strength of their earnings, profitability, institutional ownership, valuation, dividends, analyst recommendations and risk.

Profitability

This table compares Valaris and Noble’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Valaris	41.49%	12.62%	6.81%
Noble	6.60%	2.34%	1.40%

Risk & Volatility

Valaris has a beta of 1.04, suggesting that its share price is 4% more volatile than the S&P 500. Comparatively, Noble has a beta of 1, suggesting that its share price has a similar volatility profile to the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings for Valaris and Noble, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Valaris	1	10	0	0	1.91
Noble	1	10	1	0	2.00

Valaris currently has a consensus target price of $61.72, indicating a potential downside of 32.69%. Noble has a consensus target price of $41.50, indicating a potential downside of 12.43%. Given Noble’s stronger consensus rating and higher probable upside, analysts plainly believe Noble is more favorable than Valaris.

Institutional and Insider Ownership

96.7% of Valaris shares are owned by institutional investors. Comparatively, 68.1% of Noble shares are owned by institutional investors. 0.7% of Valaris shares are owned by insiders. Comparatively, 1.5% of Noble shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares Valaris and Noble”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Valaris	$2.37 billion	2.68	$982.80 million	$13.99	6.55
Noble	$3.29 billion	2.30	$216.72 million	$1.35	35.10

Valaris has higher earnings, but lower revenue than Noble. Valaris is trading at a lower price-to-earnings ratio than Noble, indicating that it is currently the more affordable of the two stocks.

Summary

Valaris beats Noble on 8 of the 14 factors compared between the two stocks.

About Valaris

Valaris Limited, together with its subsidiaries, provides offshore contract drilling services Gulf of Mexico, South America, North Sea, the Middle East, Africa, and the Asia Pacific. The company operates through four segments: Floaters, Jackups, ARO, and Other. It owns an offshore drilling rig fleet, which include drillships, dynamically positioned semisubmersible rigs, moored semisubmersible rig, and jackup rigs. It serves international, government-owned, and independent oil and gas. Valaris Limited was founded in 1975 and is based in Hamilton, Bermuda.

About Noble

Noble Corp. Plc engages in the provision offshore drilling services for oil and gas industry. It focuses on a balanced fleet of floating and jackup rigs and the deployment of drilling rigs in oil and gas basins around the world. The company was founded by Lloyd Noble and Art Olson in 1921 and is headquartered in London, the United Kingdom.