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Subsea 7 (SUBCY)
OTHER OTC:SUBCY
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Subsea 7
(OTC:SUBCY)
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Rating:73Outperform
Price Target:
$29.00
â–²(33.58% Upside)
Action:ReiteratedDate:01/31/26
The score is driven primarily by solid financial performance (growth, improving profitability, and strong free cash flow) and a constructive earnings outlook with record backlog and improved margin guidance. This is tempered by technically overbought conditions (very high RSI/Stoch) and a valuation that is only partly offset by the strong dividend yield.
Positive Factors
Backlog & Revenue Visibility
A near-$14bn backlog and strong quarterly order intake provide multi-year revenue visibility and steady utilization for vessels and crews. High book-to-bill and >80% revenue visibility for 2026 reduce execution risk and support predictable cash flows and capacity planning.
Robust Cash Flow Generation
Double-digit FCF growth and a high FCF-to-income ratio indicate strong cash conversion from operations. Durable cash generation supports reinvestment, maintenance capex, dividends or debt reduction, improving financial flexibility through project cycles and enabling strategic bidding in tenders.
Margin Expansion & Operational Efficiency
Sustained EBITDA margin expansion reflects improved project execution, higher vessel utilization and cost discipline. Elevated margins, backed by efficiency initiatives (e.g., 4insight deployment), strengthen resilience to commodity swings and enhance long-term free cash flow potential per contract.
Negative Factors
Renewables Segment Underperformance
A nearly 20% drop in renewables revenue highlights execution and regional exposure risks in a strategic growth market. Weakness reduces diversification away from oil & gas and may impede ability to capture long-term energy transition opportunities if activity or foothold in key geographies remains limited.
Foreign Exchange Losses
Material FX-related noncash losses reveal meaningful currency and derivative exposure across multi-currency contracts. Recurring FX volatility can introduce earnings volatility and complicate cash flow forecasting for long-duration projects, raising hedging costs and management attention over time.
Working Capital Volatility
An $82m adverse working capital swing signals timing and contract billing mismatches that can strain near-term liquidity. If such movements recur, they can increase reliance on short-term funding, reduce available cash for reinvestment, and pressure margins on fixed-price, long-duration projects.
Subsea 7 (SUBCY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$8.06B
Dividend Yield5.67%
Average Volume (3M)9.40K
Price to Earnings (P/E)28.1
Beta (1Y)0.77
Revenue Growth5.98%
EPS Growth79.75%
CountryUS
Employees14,876
SectorEnergy
Sector Strength52
IndustryOil & Gas Equipment & Services
Share Statistics
EPS (TTM)0.38
Shares Outstanding299,600,000
10 Day Avg. Volume7,160
30 Day Avg. Volume9,403
Financial Highlights & Ratios
PEG Ratio0.02
Price to Book (P/B)1.11
Price to Sales (P/S)0.69
P/FCF Ratio8.08
Enterprise Value/Market Cap1.05
Enterprise Value/Revenue1.21
Enterprise Value/Gross Profit9.28
Enterprise Value/Ebitda7.01
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusModerate Sell
Number of Analyst Covering1
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
Subsea 7 Business Overview & Revenue Model
Company DescriptionSubsea 7 S.A. delivers offshore projects and services for the evolving energy industry worldwide. It provides subsea field development products and services, including project management, design and engineering, procurement, fabrication, survey, installation, and commissioning of production facilities on the seabed and the tie-back of its facilities to fixed or floating platforms or to the shore. The company also offers engineering, procurement, commissioning, and installation of subsea umbilicals, risers, and flowlines; inspection, repair, maintenance, remote intervention, and integrity management of subsea infrastructure services; conventional services comprising fabrication, installation, extension, and refurbishment of fixed and floating platforms and associated pipelines in shallow water; and hook-up services. In addition, it operates heavy lifting operations and heavy transportation services for renewables structures; and installs offshore wind turbine foundations and inter-array cables, as well as engages in the decommissioning of redundant offshore structures. Further, the company provides remotely operated vehicles (ROVs) and tooling services to support exploration and production activities, as well as engineering and advisory services for customers in the oil and gas, renewables, and utilities industries. As of December 31, 2021, it has a fleet of 38 vessels. Subsea 7 S.A. was incorporated in 1993 and is based in Luxembourg.
How the Company Makes MoneySubsea 7 generates revenue through a combination of contract-based project work and service agreements with major oil and gas operators. The company's revenue model primarily hinges on the execution of large-scale engineering and construction contracts, which involve designing and installing subsea infrastructure. Key revenue streams include the provision of subsea installation services, project management for offshore developments, and maintenance services through IRM contracts. Subsea 7 also benefits from strategic partnerships with oil and gas companies, enhancing its market positioning and allowing it to secure long-term contracts. Additionally, the company capitalizes on technological innovations and efficiencies to reduce costs and enhance service delivery, further contributing to its earnings.
Subsea 7 Earnings Call Summary
Earnings Call Date:Nov 20, 2025
(Q3-2025)
| % Change Since: |
Next Earnings Date:Feb 26, 2026
Earnings Call Sentiment Positive
The earnings call presented a positive outlook with record backlog and significant EBITDA growth, supported by strong project execution and improved financial guidance. However, the call also highlighted challenges in the Renewables segment and some financial setbacks, such as foreign exchange losses and working capital movement.Q3-2025 Updates
Positive Updates
Record Backlog and Order Intake
Subsea 7 reported a record backlog close to $14 billion with an order intake of $3.8 billion in Q3, resulting in a book-to-bill ratio of 2.1x for the quarter.
Significant EBITDA Growth
Adjusted EBITDA reached $407 million, marking a 27% increase year-on-year, with an expanded margin of 22%, reflecting strong project execution and high vessel utilization.
Positive Financial Guidance
Subsea 7 refined its guidance for 2025, anticipating revenue between $6.9 billion and $7.1 billion and an increased EBITDA margin of 20% to 21%. For 2026, revenue is expected to be between $7 billion and $7.4 billion with an EBITDA margin of approximately 22%.
Technological Advancements
The deployment of 4insight software added 35 days of operation to Seven Vega, improving project delivery efficiency by over 10%.
Negative Updates
Renewables Revenue Decline
Renewables revenue in Q3 was $302 million, a reduction of 19% compared to the prior year, due to lower activity levels primarily in Taiwan.
Net Foreign Exchange Losses
Subsea 7 experienced net foreign exchange losses of $38 million, attributed to noncash embedded derivatives.
Working Capital Movement
There was an unfavorable movement in working capital of $82 million during Q3.
Company Guidance
In the recent Subsea 7 Q3 2025 results conference call, the company reported a strong financial performance with an adjusted EBITDA of $407 million, marking a 27% increase year-on-year and a 22% margin. The order intake reached $3.8 billion, achieving a book-to-bill ratio of 2.1x for the quarter and 1.4x for the first nine months of the year, while the backlog hit a record high of nearly $14 billion. The revenue for the quarter stood at $1.8 billion, consistent with the prior year, and the net income was $109 million. Subsea and Conventional operations contributed significantly with a revenue of $1.5 billion, a 6% growth year-on-year, and an adjusted EBITDA margin of 24%. The company revised its 2025 guidance, narrowing the revenue forecast to $6.9 billion-$7.1 billion and increasing the adjusted EBITDA margin range to 20%-21%. Looking ahead to 2026, Subsea 7 anticipates revenue between $7 billion and $7.4 billion with an EBITDA margin of approximately 22%, supported by over 80% visibility on revenue and a robust tendering pipeline.Subsea 7 Financial Statement Overview
Summary
Overall fundamentals are solid: revenue grew 8% (TTM), profitability improved (gross margin 12.06%, net margin 3.84%) and cash generation is strong with free cash flow up 12.73% (TTM) and healthy cash-to-earnings conversion. Balance sheet risk appears moderate with low debt-to-equity (0.26), though margins remain only moderate.Income Statement
Subsea 7 has demonstrated a strong revenue growth trajectory, with an 8% increase in the TTM period. The company has improved its gross profit margin to 12.06% and net profit margin to 3.84% in the TTM, indicating enhanced profitability. EBIT and EBITDA margins have also shown positive trends, reflecting operational efficiency. However, the margins remain moderate, suggesting room for further improvement.75
Positive
Balance Sheet
The balance sheet shows a stable financial position with a manageable debt-to-equity ratio of 0.26 in the TTM. Return on equity has improved to 6.31%, indicating better utilization of equity. The equity ratio remains strong, suggesting a solid capital structure. However, the company should continue to monitor its debt levels to maintain financial flexibility.70
Positive
Cash Flow
Subsea 7's cash flow performance is robust, with a significant 12.73% growth in free cash flow in the TTM. The operating cash flow to net income ratio is healthy, indicating strong cash generation relative to earnings. The free cash flow to net income ratio of 66.93% underscores efficient cash management. Continued focus on cash flow generation will support future growth initiatives.80
Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 6.99B | 6.84B | 5.97B | 5.14B | 5.01B | 3.47B |
| Gross Profit | 910.60M | 704.70M | 362.80M | 397.00M | 295.80M | -186.50M |
| EBITDA | 1.21B | 1.09B | 689.20M | 631.20M | 564.60M | -605.00M |
| Net Income | 287.90M | 201.40M | 15.40M | 36.40M | 31.80M | -1.11B |
Balance Sheet | ||||||
| Total Assets | 8.31B | 7.68B | 8.10B | 6.94B | 6.99B | 6.30B |
| Cash, Cash Equivalents and Short-Term Investments | 545.70M | 556.40M | 726.20M | 610.40M | 553.10M | 480.20M |
| Total Debt | 1.03B | 1.18B | 1.30B | 613.00M | 652.80M | 463.00M |
| Total Liabilities | 4.03B | 3.39B | 3.74B | 2.49B | 2.50B | 2.04B |
| Stockholders Equity | 4.25B | 4.25B | 4.32B | 4.12B | 4.18B | 4.23B |
Cash Flow | ||||||
| Free Cash Flow | 865.80M | 582.70M | 78.20M | 254.80M | 126.50M | 264.20M |
| Operating Cash Flow | 1.16B | 931.40M | 660.00M | 485.80M | 293.00M | 446.80M |
| Investing Cash Flow | -252.30M | -413.60M | -710.20M | -220.10M | -183.70M | -164.60M |
| Financing Cash Flow | -806.70M | -680.20M | 151.10M | -211.20M | -22.80M | -157.60M |
Subsea 7 Technical Analysis
Positive
21.71
Price Trends
22.89
Positive
20.96
Positive
19.65
Positive
Market Momentum
1.25
Positive
68.48
Neutral
73.15
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SUBCY, the sentiment is Positive. The current price of 21.71 is below the 20-day moving average (MA) of 25.99, below the 50-day MA of 22.89, and above the 200-day MA of 19.65, indicating a bullish trend. The MACD of 1.25 indicates Positive momentum. The RSI at 68.48 is Neutral, neither overbought nor oversold. The STOCH value of 73.15 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SUBCY.
Subsea 7 Peers Comparison
UnderperformOutperform
Sector (65)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $26.60B | 13.55 | 11.67% | 4.43% | -9.76% | -18.94% | |
79 Outperform | $25.19B | 27.07 | 29.85% | 0.44% | 11.73% | 45.70% | |
73 Outperform | $8.06B | 28.09 | 6.76% | 5.67% | 5.98% | 79.75% | |
73 Outperform | $77.14B | 21.97 | 14.28% | 2.98% | -2.13% | -16.76% | |
69 Neutral | $60.82B | 23.64 | 14.49% | 2.04% | 1.51% | 30.09% | |
66 Neutral | $29.12B | 23.12 | 12.24% | 2.41% | -4.06% | -47.41% | |
65 Neutral | $15.17B | 7.61 | 4.09% | 5.20% | 3.87% | -62.32% |
* Energy Sector Average
SUBCY
Subsea 7
26.95
11.41
73.42%
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Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.