VAL
Valaris Limited
$74.46
Oil & Gas E&P
85%
FCF at Price Deck × Multiple
Strong
·
Conviction
Overvalued
Trading 78.8% above fair value
You pay
$74.46
Bear
$13.84
Fair
$41.64
Bull
$78.69
Bear
$13.84
-81.4%
FCF $142M × 8x
Fair
$41.64
-44.1%
FCF $203M × 11x
Bull
$78.69
+5.7%
FCF $264M × 14x
Key Value Driver
Oil price assumption ($75/bbl base case)
Implied Market Multiple
28.3x
Summary
Our base-case estimate uses a valuation based on free cash flow under different commodity price assumptions and a valuation multiple. We then blend that result with the average analyst price target of $75.00 from 54 analysts, using a 35% weight on analyst consensus. That produces an estimated intrinsic value of $41.64 per share.
Warnings
If oil drops to $60/barrel, the stock could fall -89%. Check whether the company can survive at low prices and still pay its dividend.
Where you think oil prices will settle long-term drives over 80% of this valuation. The biggest risk isn't the company itself — it's getting the commodity price wrong.
Wall Street's average price target is $75.00 (from 54 analysts). Our estimate is 68% below the consensus -- consider that gap carefully.
Key Risks
- Growth DCF inappropriate — commodity volumes do not compound
- Geopolitical premiums are real but historically temporary
- Reserve replacement ratio below 100% for 3 years is existential