Subsea 7 (SUBCY) AI Stock Analysis

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Subsea 7

(OTC:SUBCY)

Rating:70Outperform

Price Target:

$19.50

▲(1.77%Upside)

Subsea 7's overall stock score reflects its robust financial health, strong revenue growth, and operational efficiency. The high valuation and technical indicators suggest caution due to potential short-term volatility. The positive earnings call outlook, with strong client relationships and strategic alliances, supports long-term growth prospects, counterbalancing current market valuation concerns.

Subsea 7 (SUBCY) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$5.69B

Dividend Yield6.11%

Average Volume (3M)8.04K

Price to Earnings (P/E)29.7

Beta (1Y)0.78

Revenue Growth13.85%

EPS Growth213.25%

CountryUS

Employees14,876

SectorEnergy

Sector Strength45

IndustryOil & Gas Equipment & Services

Share Statistics

EPS (TTM)0.06

Shares Outstanding299,600,000

10 Day Avg. Volume9,021

30 Day Avg. Volume8,041

Financial Highlights & Ratios

PEG Ratio-9.93

Price to Book (P/B)1.33

Price to Sales (P/S)0.00

P/FCF Ratio8.67

Enterprise Value/Market Cap1.11

Enterprise Value/Revenue0.24

Enterprise Value/Gross Profit8.04

Enterprise Value/Ebitda1.58

Forecast

1Y Price Target

$19.50

Price Target Upside1.77% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering0

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 variety of key streams, primarily from contracts awarded by major oil and gas companies for the development and maintenance of offshore energy infrastructure. The company offers engineering, procurement, construction, and installation (EPCI) services, which form a significant portion of its earnings. Revenue is also derived from long-term agreements for inspection, maintenance, and repair services, ensuring the operability and safety of underwater installations. Additionally, Subsea 7 is increasingly involved in the renewable energy sector, providing solutions for offshore wind farm development, which represents a growing revenue segment. Strategic partnerships and alliances with energy companies and technology providers further enhance its market position and contribute to its financial performance.

Subsea 7 Earnings Call Summary

Earnings Call Date:Apr 30, 2025

(Q1-2025)

% Change Since: 32.87%|

Next Earnings Date:Jul 31, 2025

Earnings Call Sentiment Positive

The earnings call reflects a robust financial performance with significant growth in revenue and backlog, particularly in the renewables segment. While there are challenges related to cash flow and operating losses in renewables, these are offset by strong client relationships and strategic alliances. The overall outlook remains positive with maintained guidance and a strong pipeline of projects.

Q1-2025 Updates

Positive Updates

Strong Financial Performance

Subsea 7 delivered a Q1 adjusted EBITDA of $236 million, representing a 46% growth year-on-year and a margin of 15%. Revenue was $1.5 billion, up 10% compared to the same quarter last year.

Increased Backlog and Visibility

The backlog for execution in the remainder of 2025 is $4.8 billion, offering over 80% visibility for the year. Total firm orders valued at $10.8 billion provide a solid foundation for future revenue.

Renewables Segment Growth

Renewables revenue in Q1 was $245 million, up 37% year-on-year, with an adjusted EBITDA margin increase from 1% to 10%. This growth was driven by activity in Taiwan and early works on East Anglia THREE in the UK.

Maintained Financial Guidance

Guidance for the full year 2025 remains unchanged, with a plan to distribute approximately $350 million in dividends to shareholders.

Positive Client Relationships and Alliances

The Subsea Integration Alliance with BP and other clients continues to bring value, with new project awards and a robust tendering pipeline indicating high levels of client engagement.

Negative Updates

Decreased Cash and Liquidity

Cash and cash equivalents decreased by $116 million to $459 million. Net cash used in financing activities was $106 million, including lease liability payments and repayment of borrowings.

Net Debt Increase

Net debt was reported at $632 million, including lease liabilities of $400 million, equating to a net debt to the last 12 months adjusted EBITDA of 0.5 times.

Operating Loss in Renewables

Despite improvements, the renewables segment faced a net operating loss of $5 million, though this was an improvement compared to a $24 million loss in the same quarter of the previous year.

Company Guidance

In the first quarter of 2025, Subsea 7 reported a strong operational performance with an adjusted EBITDA of $236 million, reflecting a 46% increase year-on-year and a margin of 15%. Revenue for the quarter rose to $1.5 billion, marking a 10% increase from the previous year. The backlog for the year stands at $4.8 billion, providing over 80% visibility. The company also noted a robust cash flow with net cash generated from operating activities at $51 million, despite a $163 million build in working capital. Capital expenditure for the quarter was $76 million, and the group maintained a liquidity position of $1.2 billion. Subsea 7's financial guidance for 2025 remains unchanged, with expectations to meet the outlined targets, including planned dividends of approximately $350 million to shareholders.

Subsea 7 Financial Statement Overview

Summary

Subsea 7 demonstrates strong revenue growth and efficient cost management, with robust cash flow generation. While profitability margins can be improved, the company's manageable financial leverage and strong capital structure position it well for future opportunities.

Income Statement

Positive

The company shows a strong revenue growth trajectory with a TTM (Trailing-Twelve-Months) revenue of $6.97 billion, up from $5.13 billion in 2022, representing a significant growth rate. The gross profit margin has improved to 11.26% from previous years, indicating better cost management. Net profit margin stands at 2.78%, reflecting profitability but also suggesting room for improvement. The EBIT and EBITDA margins are strong at 7.09% and 15.30%, respectively, showcasing stable operational efficiency.

Balance Sheet

Positive

The company's financial leverage is moderate with a debt-to-equity ratio of 0.25, which is manageable for the industry. The equity ratio is healthy at 55.07%, suggesting a strong capital structure with a significant portion of assets financed by equity. Return on equity (ROE) is modest at 4.48%, indicating moderate profitability relative to shareholder equity.

Cash Flow

Very Positive

Subsea 7 has demonstrated strong cash flow metrics with a free cash flow growth rate of 8.65% compared to the previous period. The operating cash flow to net income ratio is robust at 5.04, and the free cash flow to net income ratio is strong at 3.27, indicating efficient cash conversion from net income and good liquidity management.

Breakdown	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	6.84B	5.97B	5.14B	5.01B	3.47B
Gross Profit	704.70M	362.80M	397.00M	295.80M	-186.50M
EBITDA	1.09B	680.70M	631.20M	558.60M	-605.00M
Net Income	201.40M	15.40M	36.40M	31.80M	-1.11B
Balance Sheet
Total Assets	7.68B	8.10B	6.94B	6.99B	6.30B
Cash, Cash Equivalents and Short-Term Investments	556.40M	726.20M	610.40M	553.10M	480.20M
Total Debt	1.18B	1.30B	613.00M	652.80M	463.00M
Total Liabilities	3.39B	3.74B	2.49B	2.50B	2.04B
Stockholders Equity	4.25B	4.32B	4.12B	4.18B	4.23B
Cash Flow
Free Cash Flow	582.70M	78.20M	254.80M	126.50M	264.20M
Operating Cash Flow	931.40M	660.00M	485.80M	293.00M	446.80M
Investing Cash Flow	-413.60M	-710.20M	-220.10M	-183.70M	-164.60M
Financing Cash Flow	-680.20M	151.10M	-211.20M	-22.80M	-157.60M

Subsea 7 Technical Analysis

Technical Analysis Sentiment

Positive

Last Price19.16

Price Trends

50DMA

17.65

Positive

100DMA

16.03

Positive

200DMA

15.82

Positive

Market Momentum

MACD

0.47

Positive

RSI

60.24

Neutral

STOCH

27.97

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 19.16 is above the 20-day moving average (MA) of 18.97, above the 50-day MA of 17.65, and above the 200-day MA of 15.82, indicating a bullish trend. The MACD of 0.47 indicates Positive momentum. The RSI at 60.24 is Neutral, neither overbought nor oversold. The STOCH value of 27.97 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

Overall Rating

UnderperformOutperform

Sector (52)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
FTI	81 Outperform	$14.38B	18.11	27.24%	0.58%	14.26%	294.37%
BKR	76 Outperform	$39.50B	13.62	18.04%	2.36%	6.22%	62.58%
HAL	76 Outperform	$18.39B	8.96	20.99%	3.18%	-2.54%	-17.53%
SLB	76 Outperform	$49.27B	12.29	20.82%	3.25%	5.83%	-2.03%
NOV	74 Outperform	$4.98B	8.84	9.29%	2.34%	0.54%	-39.88%
SUBCY	70 Outperform	$5.69B	29.66	4.48%	6.11%	13.85%	213.25%
Sector *	52 Neutral	C$2.95B	-1.04	-3.46%	5.86%	3.01%	-47.13%

* Energy Sector Average

Performance Comparison

SUBCY

Subsea 7

19.16

1.34

7.52%

BKR

Baker Hughes Company

38.68

3.34

9.45%

FTI

TechnipFMC

32.95

5.72

21.01%

HAL

Halliburton

21.24

-14.17

-40.02%

NOV

12.72

-6.02

-32.12%

SLB

Schlumberger

34.59

-12.95

-27.24%

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.Date of analysis: Jun 05, 2025