Borr Drilling (NYSE:BORR) and Seadrill (NYSE:SDRL) Head to Head Review

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

Dividends

Borr Drilling pays an annual dividend of $0.10 per share and has a dividend yield of 5.5%. Seadrill pays an annual dividend of $4.00 per share and has a dividend yield of 16.1%. Borr Drilling pays out 31.3% of its earnings in the form of a dividend. Seadrill pays out 63.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Risk and Volatility

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

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Borr Drilling	$1.01 billion	0.43	$22.10 million	$0.32	5.72
Seadrill	$1.39 billion	1.12	$300.00 million	$6.33	3.93

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.

Analyst Ratings

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

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

Borr Drilling currently has a consensus target price of $9.00, suggesting a potential upside of 391.80%. Seadrill has a consensus target price of $50.75, suggesting a potential upside of 103.98%. Given Borr Drilling’s higher possible upside, equities research analysts clearly believe Borr Drilling is more favorable than Seadrill.

Profitability

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

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

Insider & Institutional Ownership

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

Summary

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

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.

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.