Valaris Limited

Overview

An investor-focused, William J. O’Neil-style CAN SLIM analysis of Valaris Limited (NYSE: VAL), integrating the latest structured financials, recent operating results, contract wins/backlog, and industry conditions to determine whether shares should be bought, held, or sold.

Financial and Business Overview

Valaris is a leading offshore drilling contractor with a high-specification fleet of ultra-deepwater drillships, semisubmersibles, and jackups plus a 50% interest in ARO Drilling (Saudi JV). The model is contract-dayrate driven with multi-quarter/multi-year revenue visibility from backlog. Financially, the company is operating from an improved post-restructuring balance sheet: cash and restricted cash were $454M as of Mar 31, 2025 versus long-term debt ~ $1.08B (net debt ≈ $0.63B). In Q1 2025, operating revenues were $620.7M, Adjusted EBITDA $181.3M, and revenue efficiency 96%; net loss was -$39.2M due to $167M discrete tax expense (non-recurring). Q2 2025 results (AInvest) showed revenue $615.2M (+0.84% YoY), EPS $1.61 (YoY -20.7%), Adjusted EBITDA ~$201M, and ~$63M free cash flow. Backlog expanded by ~$1B QoQ to ~$4.7B as of late July, providing roughly ~2 years of revenue visibility at the current run-rate. Management highlighted high revenue efficiency, robust floater day rates, and disciplined capital allocation (asset sales; selective buybacks; capex $100M in Q1 2025). On valuation, as of Oct 18, 2025 structured data: price $48.33, market cap ~$3.44B, trailing P/E ~12.7, forward P/E ~9.2, P/B ~1.47, TTM EPS ~3.82, forward EPS ~5.27. EV/EBITDA (vs 2025E EBITDA guidance raised to $565–$605M) appears in the high-6x to ~7x range, reasonable for a cyclical driller with strong backlog and improving dayrates.

Market Position & Competitive Advantages

Position: Valaris is among the largest diversified offshore drillers with breadth across floaters and jackups and a JV platform (ARO) tied to Saudi Aramco. Q1 2025 Average Daily Revenue for drillships reached ~$418k/day (with fleet-level floater ADR $384k) and is scheduled to step up further as contracted work rolls forward (average drillship day rates implied in fleet status move from $422k in 2026 to $458k in 2027+). Revenue efficiency remains best-in-class at ~96%. Recent wins include: a 940-day extension for DS-16 and a 914-day contract for DS-18 (combined ~$760M) in the U.S. Gulf, a 2-year $352M contract for DS-10 offshore West Africa, plus multiple jackup awards/extensions, lifting total backlog to ~$4.7B by late July 2025. Competitive advantages: high-spec 7th-gen drillships (outperforming 6th-gen on rates and utilization), disciplined reactivations (only with contracts), and a large installed base allowing scale efficiencies and cross-basin optionality. Risks: (1) Macro/commodity—offshore rig demand softened since late 2024; Westwood reports marketed utilization slipped to mid-to-high 80s in early 2025 with certain jackups suspended (e.g., Aramco) and some project deferrals; (2) Contract volatility—e.g., Harbour Energy suspension notice for VALARIS 120, plus planned maintenance OOS days; (3) Reactivation/SPS costs can be high and timing-sensitive; (4) Earnings volatility from tax items (Q1 discrete tax charge); (5) Geopolitical and regulatory risk in several basins. Industry outlook is mixed near term but constructive longer term; management’s commentary suggests floater utilization may trough 1H26 but exit >90% into 2026/27 as deepwater programs ramp.

Stock Performance

As of Oct 18, 2025 (structured data): shares trade at $48.33, 52-week range $27.15–$53.98 (current ~+78% above the low and ~10% below the high). The stock is modestly below its 50-day average ($49.53) and above its 200-day average ($43.60), indicating an intermediate trend pullback within a longer-term uptrend. One-year change shows -5.7% (period-dependent), reflecting industry softness and episodic oil price volatility despite growing backlog. Average 3-month daily volume is ~1.21M shares; shares outstanding ~71.2M. From a CAN SLIM price-action lens, the stock is consolidating beneath prior highs; a breakout above ~$54 on strong volume would be constructive technically.

CAN SLIM Analysis

Conclusion

From a strict CAN SLIM lens, VAL lacks consistent current EPS acceleration and is not at new price highs, despite strong fundamental tailwinds (backlog ~$4.7B, rising dayrates, high revenue efficiency, and improving forward earnings). Industry utilization remains mixed near term. Valuation is reasonable (forward P/E ~9.2; EV/EBITDA ~7x on raised 2025 guidance), making the stock attractive for value/cycle investors, but O’Neil’s method prioritizes earnings momentum and breakouts. Action plan: keep on the watch list; consider upgrading to BUY on (1) a decisive breakout above ~$54 on volume, and (2) evidence of EPS re-acceleration (clean YoY growth in upcoming quarters) alongside continued backlog wins. For value-oriented investors who accept cyclical risk, gradual accumulation near the 200-DMA with a 7–8% stop-loss can be justified, but the CAN SLIM rating remains HOLD pending technical and EPS confirmation.