- If you are wondering whether Borr Drilling's share price reflects its true value, this article will walk through the key numbers that matter before you make up your mind.
- The stock has been volatile recently, with a 4.6% decline over the last 7 days, a 23.9% gain over 30 days, and returns of 45.4% year to date and 147.9% over the past year. This compares to a 16.8% decline over 3 years and a 160.9% gain over 5 years.
- These swings have drawn renewed attention to Borr Drilling, as investors reassess how the company is priced in the market and what that might imply for risk and reward. This article is part of ongoing coverage rather than a reaction to a single headline. It aims to give you context for those moves by focusing squarely on valuation.
- Right now Borr Drilling has a valuation score of 2 out of 6, meaning it screens as undervalued on 2 of the 6 checks used in our assessment. Next, we will walk through the main valuation approaches behind that score, and then finish with a more complete way to think about what the current price really implies for long term investors.
Borr Drilling scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.
Approach 1: Borr Drilling Discounted Cash Flow (DCF) Analysis
A Discounted Cash Flow, or DCF, model estimates what a company could be worth by projecting its future cash flows and discounting them back to today, so you can compare that value to the current share price.
For Borr Drilling, the model used is a 2 Stage Free Cash Flow to Equity approach. The latest twelve month Free Cash Flow is about $15.9 million. Analysts have provided forecasts out to 2027, with Simply Wall St extrapolating further to build a 10 year path of cash flows that range from a projected cash outflow of $111.5 million in 2026 to projected inflows such as $1,177.6 million in 2035, all in $ and then discounted back to today.
On this basis, the DCF model suggests an estimated intrinsic value of $40.80 per share. Compared with the current share price, the implied discount is 85.8%. This indicates that, under this set of assumptions and projections, Borr Drilling appears heavily undervalued.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests Borr Drilling is undervalued by 85.8%. Track this in your watchlist or portfolio, or discover 49 more high quality undervalued stocks.
Approach 2: Borr Drilling Price vs Earnings
For a company that is generating profits, the P/E ratio is a useful yardstick because it tells you how much you are paying for each dollar of earnings. Investors usually accept a higher or lower P/E depending on what they expect for future earnings growth and how much risk they see in those earnings.
Borr Drilling currently trades on a P/E of 39.60x. That is above the Energy Services industry average P/E of 27.52x and also above the peer average of 11.51x, so the stock is pricing in stronger earnings characteristics or lower perceived risk than those benchmarks suggest.
Simply Wall St’s Fair Ratio for Borr Drilling is 22.99x. This is a proprietary estimate of what a reasonable P/E could be, given factors such as the company’s earnings profile, its industry, profit margins, market capitalization and specific risks. Because it is tailored to the company, the Fair Ratio can be more informative than a simple comparison with peers or the broad industry, which may differ on growth, size or risk.
Comparing the Fair Ratio of 22.99x with the actual P/E of 39.60x points to the shares trading above that fair range.
Result: OVERVALUED
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Upgrade Your Decision Making: Choose your Borr Drilling Narrative
Earlier we mentioned that there is an even better way to understand valuation. Let us introduce you to Narratives, a simple tool on Simply Wall St’s Community page. With Narratives, you can spell out your story for Borr Drilling in numbers by plugging in what you think are reasonable paths for future revenue, earnings and margins. These then flow through to a fair value that you can compare with today’s price to help you decide whether the stock looks attractive or expensive. Because Narratives update automatically when fresh news or earnings arrive, you can easily see how a more optimistic view that points to a fair value of US$6.50 and stronger revenue growth assumptions stacks up against a more cautious view anchored closer to US$2.80 with softer growth and margin expectations. This way, you are always clear about which version of the story you are using when you make decisions.
For Borr Drilling however we will make it really easy for you with previews of two leading Borr Drilling Narratives:
First up is a bullish take that leans into rig demand, fleet quality and dual listing potential, and then a more cautious view that leans into leverage, contract risk and the energy transition. Looking at both side by side can help you decide which set of assumptions feels closer to how you see the company.
Fair value in this bullish narrative: US$6.50 per share
Implied pricing vs last close of US$5.80: about 11% below that fair value
Revenue growth assumption used in the narrative: 16.87% per year
- Emphasises strong global jack up rig demand, limited new supply and a young, premium fleet that is positioned to win work across key offshore basins.
- Points to a stronger balance sheet and additional liquidity as support for potential rig acquisitions and industry consolidation, alongside the planned dual listing in Oslo.
- Acknowledges risks around renewables policy shifts, leverage, receivables and ESG pressures, but sees them as manageable within a higher fair value of US$6.50.
Fair value in this more cautious narrative: US$4.64 per share
Implied pricing vs last close of US$5.80: about 25% above that fair value
Revenue growth assumption used in the narrative: 9.31% per year
- Highlights the possibility that current optimism prices in strong day rates and utilization while underplaying risks from rig oversupply, shorter contracts and potential crude price weakness.
- Focuses on high leverage, refinancing needs and tightening regulations, which could divert capital toward debt service and higher costs instead of growth projects.
- Accepts that demand for modern rigs and recent contracts support the business, but still sees the shares as expensive relative to a fair value of US$4.64 on the consensus assumptions.
If you want to go beyond these snapshots and test your own assumptions for Borr Drilling, you can build your own narrative using the same framework, plug in your revenue, margin and discount rate views, and see how your fair value stacks up against the current price and the community range.
Curious how numbers become stories that shape markets? Explore Community Narratives
Do you think there's more to the story for Borr Drilling? 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.
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