Head to Head Analysis: SLB (NYSE:SLB) & Borr Drilling (NYSE:BORR)

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

Analyst Recommendations

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Borr Drilling	1	2	0	2	2.60
SLB	1	2	18	2	2.91

Borr Drilling currently has a consensus target price of $5.27, suggesting a potential upside of 23.49%. SLB has a consensus target price of $61.65, suggesting a potential upside of 9.91%. Given Borr Drilling’s higher possible upside, equities analysts plainly believe Borr Drilling is more favorable than SLB.

Insider and Institutional Ownership

83.1% of Borr Drilling shares are held by institutional investors. Comparatively, 82.0% of SLB shares are held by institutional investors. 7.9% of Borr Drilling shares are held by insiders. Comparatively, 0.2% of SLB shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Risk and Volatility

Borr Drilling has a beta of 1.03, suggesting that its share price is 3% more volatile than the S&P 500. Comparatively, SLB has a beta of 0.76, suggesting that its share price is 24% less volatile than the S&P 500.

Earnings and Valuation

This table compares Borr Drilling and SLB”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Borr Drilling	$1.02 billion	1.32	$45.00 million	($0.78)	-5.47
SLB	$35.71 billion	2.33	$3.37 billion	$2.07	27.10

SLB has higher revenue and earnings than Borr Drilling. Borr Drilling is trading at a lower price-to-earnings ratio than SLB, indicating that it is currently the more affordable of the two stocks.

Dividends

Borr Drilling pays an annual dividend of $0.10 per share and has a dividend yield of 2.3%. SLB pays an annual dividend of $1.18 per share and has a dividend yield of 2.1%. Borr Drilling pays out -12.8% of its earnings in the form of a dividend. SLB pays out 57.0% 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. SLB has increased its dividend for 5 consecutive years. Borr Drilling is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Borr Drilling	-23.98%	-5.95%	-1.84%
SLB	8.53%	14.05%	6.95%

Summary

SLB beats Borr Drilling on 11 of the 17 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 SLB

Schlumberger Limited engages in the provision of technology for the energy industry worldwide. The company operates through four divisions: Digital & Integration, Reservoir Performance, Well Construction, and Production Systems. The company provides field development and hydrocarbon production, carbon management, and integration of adjacent energy systems; reservoir interpretation and data processing services for exploration data; and well construction and production improvement services and products. It also offers subsurface geology and fluids evaluation information; open and cased hole services; exploration and production pressure, and flow-rate measurement services; and pressure pumping, well stimulation, and coiled tubing equipment solutions. In addition, the company offers mud logging, directional drilling, measurement-while-drilling, and logging-while-drilling services, as well as engineering support services; supplies drilling fluid systems; designs, manufactures, and markets roller cone and fixed cutter drill bits; bottom-hole-assembly and borehole enlargement technologies; well cementing products and services; well planning, well drilling, engineering, supervision, logistics, procurement, and contracting of third parties, as well as drilling rig management solutions; and drilling equipment and services, as well as land drilling rigs and related services. Further, it provides artificial lift production equipment and optimization services; supplies packers, safety valves, sand control technology, and various intelligent well completions technology and equipment; designs and manufactures valves, chokes, actuators, and surface trees; and OneSubsea, an integrated solutions, products, systems, and services, including wellheads, subsea trees, manifolds and flowline connectors, control systems, connectors, and services. The company was formerly known as Socie´te´ de Prospection E´lectrique. Schlumberger Limited was founded in 1926 and is based in Houston, Texas.