SEADRILL Ltd

Where It Passes

Where It Falls Short

• Cash Flow0% pass✓ 1✗ 11▾

  No clean pass — all 10 investors flag at least one cash flow criterion

  Free Cash Flow Proxy$-544.0M

  ✗BuffettPositive and growing

  FCF Positive and Growing$-238.0M

  ✗LynchPositive and growing

  Operating Cash Flow$-28.0M

  ✗PiotroskiCFO > 0

  (CFO / Total Assets) vs ROACFO/Assets=-0.71%, ROA=-1.95%

  ✓PiotroskiCFO/Assets > ROA

  Price / (CFO / Shares)N/A (negative CFPS)

  ✗Dreman< 8x

  P/E or FCF Yield

  ✗PabraiP/E < 15 or FCF Yield > 10%

  FCF Positive1/4 years FCF positive

  ✗MarksPositive FCF in majority of recent years

  (OCF - CapEx) / Market Cap

  ✗Ackman>= 4%

  Price / FCF per Share

  ✗Ackman<= 25

  Positive Operating Cash Flow frequency3/7 years positive

  ✗SleepPositive OCF in >= 70% of available years

  Operating Cash Flow - Capital Expenditures

  ✗Neff> $0 (app proxy for a strong fundamental case)

  (Operating cash flow - capex) / market capitalization

  ✗OshaughnessyTop 10% of eligible cross-section
• Growth0% pass✓ 2✗ 11▾

  No clean pass — all 8 investors flag at least one growth criterion

  EPS Growth (3-yr avg, 10-yr window)

  ✗Graham>= 33% growth

  Basic earnings-growth PEG (dividends excluded)

  ✗Lynch< 1.0 (ideally < 0.5)

  3-5 Year EPS CAGR

  ✗Lynch15-30% (Fast Grower); > 0% to pass

  Inventory Growth vs Revenue GrowthN/A (no inventory)

  ✓LynchInventory growth < Revenue growth

  EPS Growth Direction

  ✗DremanPositive over recent years

  EPS CAGR

  ✗Dreman> 5% annualized

  Positive Net Income Frequency2/7 years positive

  ✗MarksPositive net income in >= 7 of last 10 years

  3yr Median Revenue Growth-2.0%

  ✗Ackman>= 5%

  Positive EPS Growth Frequency

  ✗AckmanPositive EPS growth in >= 3 of last 5 years

  5-Year EPS CAGR

  ✗Templeton> 0% (5-year EPS CAGR)

  Revenue growth vs. gross and operating margin trendrevenue flat/down, operating margin 21.9% -> 3.3%

  ✗SleepRevenue rising; gross margin flat or falling; operating margin holding

  5-year Revenue CAGR8.4%

  ✓SleepCAGR > 7%

  3-5 Year Diluted EPS CAGR

  ✗Neff7%-20% annualized
• Profitability6% pass✓ 4✗ 31▾

  15 of 16 flag SDRL's profitability — Graham, Buffett, Lynch +12 more

  Positive EPS (10 years)2/10 years positive

  ✗GrahamPositive EPS every year for 10 years

  EPS Growth (3-yr avg, 10-yr window)

  ✗Graham>= 33% growth

  Net Income Positive (10+ years)2/10 years positive

  ✗BuffettPositive every year for 10+ years

  ROE (up to 5-year arithmetic mean)-18.2%

  ✗Buffett> 15% arithmetic mean (app rule)

  Operating Margin (10-yr trend)3.3% (latest)

  ✓BuffettStable or rising over 10 years

  Free Cash Flow Proxy$-544.0M

  ✗BuffettPositive and growing

  Earnings Variance (10-yr CoV)

  ✗BuffettCoV < 0.3

  Retained Earnings Effectiveness

  ✗Buffett$1 retained -> > $1 market value created

  Basic earnings-growth PEG (dividends excluded)

  ✗Lynch< 1.0 (ideally < 0.5)

  3-5 Year EPS CAGR

  ✗Lynch15-30% (Fast Grower); > 0% to pass

  ROE-0.6%

  ✗Lynch> 15%

  EBIT / Enterprise Value1.5%

  ✗Greenblatt> 10%

  Earnings Yield + ROC AssessmentEY=1.5%, ROC=None

  ✗GreenblattBoth EY > 10% and ROC > 25%

  Net Income / Total Assets-1.95%

  ✗PiotroskiROA > 0

  ROA Change YoY10.73% -> -1.95% (delta: -12.68%)

  ✗PiotroskiCurrent ROA > Prior ROA

  (CFO / Total Assets) vs ROACFO/Assets=-0.71%, ROA=-1.95%

  ✓PiotroskiCFO/Assets > ROA

  Gross Margin Change YoY

  ✗PiotroskiImproved YoY

  Pre-Tax Income / Revenue0.4%

  ✗Dreman>= 8%

  Net Income / Shareholders' Equity-0.6%

  ✗Dreman> 12%

  Margin of SafetyP/B=1.0x

  ✓PabraiP/B < 1.5 or P/E < 15

  Return on Equity7.5% (3-yr avg)

  ✗AkreROE > 20% (3-year avg)

  Discount to Intrinsic Value42.2% (IV=$78.67 vs Price=$45.46)

  ✓Marks>= 20% below intrinsic value

  Positive Net Income Frequency2/7 years positive

  ✗MarksPositive net income in >= 7 of last 10 years

  Operating Income / Revenue8.6%

  ✗Ackman>= 15%

  Net Income / Shareholders Equity-0.6%

  ✗Ackman>= 15%

  5-Year EPS CAGR

  ✗Templeton> 0% (5-year EPS CAGR)

  Operating Margin Trend21.9% (2023) -> 3.3% (2025)

  ✗TempletonNon-negative operating-margin trend over 3 years

  Revenue growth vs. gross and operating margin trendrevenue flat/down, operating margin 21.9% -> 3.3%

  ✗SleepRevenue rising; gross margin flat or falling; operating margin holding

  Net income / market capitalization-0.64%; #3343/6340 (top 52.7%)

  ✗AsnessTop 30% of eligible cross-section✗OshaughnessyTop 10% of eligible cross-section

  Gross profit / total assets

  ✗AsnessTop 30% of eligible cross-section

  Net income / positive book equity-0.64%; #2965/5226 (top 56.7%)

  ✗AsnessTop 30% of eligible cross-section

  Negative 5-year standard deviation of ROA-0.1177; #3678/5884 (top 62.5%)

  ✗AsnessTop 30% of eligible cross-section

  3-5 Year Diluted EPS CAGR

  ✗Neff7%-20% annualized

  Positive Diluted-EPS Years2/6 years positive

  ✗Schloss>= 70% positive over 5-10 observed years (app rule)
• Verdicts14% pass✓ 2✗ 12▾

  Split decision: 12 FAIL · 2 PASS · 2 NEUTRAL

  Overall verdict

  ✓GrahamPASS (5/9)✗BuffettFAIL (1/9)✗LynchFAIL (2/7)•GreenblattNot ranked✗PiotroskiFAIL (F-Score 3)✗DremanFAIL (4/11)✓MungerPASS (2/4)✗PabraiFAIL (1/3)✗AkreFAIL (1/6)✗MarksFAIL (2/5)✗AckmanFAIL (2/9)✗TempletonFAIL (3/8)✗SleepFAIL (2/6)•AsnessNEUTRAL (Not ranked)✗NeffFAIL (1/6)✗SchlossFAIL (3/7)•OshaughnessyNEUTRAL (Not ranked)
• Valuation23% pass✓ 10✗ 18▾

  10 of 13 flag SDRL's valuation — Lynch, Greenblatt, Dreman +7 more

  Price / Book Value per Share1.0x

  ✓Dreman< 1.2x✓Templeton< 1.5x✗SchlossP/B <= 0.80x (app cutoff)

  Price / 3-yr avg EPS8.7x

  ✓Graham<= 15x

  Price-to-Book Ratio1.0x

  ✓Graham<= 1.5x

  P/E x P/B8.60

  ✓Graham<= 22.5

  Basic earnings-growth PEG (dividends excluded)

  ✗Lynch< 1.0 (ideally < 0.5)

  EBIT / Enterprise Value1.5%

  ✗Greenblatt> 10%

  Earnings Yield + ROC AssessmentEY=1.5%, ROC=None

  ✗GreenblattBoth EY > 10% and ROC > 25%

  Price / EPS

  ✗Dreman< 12x✗Templeton< 12x (fixed ceiling; proxy for the market's cheapest 40%)

  Price / (CFO / Shares)N/A (negative CFPS)

  ✗Dreman< 8x

  Valuation ReasonablenessOE Yield=5.7%

  ✓MungerP/E < 25 or Owner Earnings Yield > 5%

  P/E or FCF Yield

  ✗PabraiP/E < 15 or FCF Yield > 10%

  P/B or P/E vs. Historical AverageP/B=1.0x

  ✓MarksP/E < 15 or P/B < 2.0

  Discount to Intrinsic Value42.2% (IV=$78.67 vs Price=$45.46)

  ✓Marks>= 20% below intrinsic value

  Price / FCF per Share

  ✗Ackman<= 25

  Price vs. Trailing Low221% of trailing low ($20.54)

  ✗Templeton<= 120% of trailing low (certified split-adjusted live window)

  Net income / market capitalization-0.64%; #3343/6340 (top 52.7%)

  ✗AsnessTop 30% of eligible cross-section✗OshaughnessyTop 10% of eligible cross-section

  Positive book equity / market capitalization+1.0073; #1472/6449 (top 22.8%)

  ✓AsnessTop 30% of eligible cross-section

  Price / Diluted EPS

  ✗NeffP/E <= 15x (app proxy for a P/E 40%-60% below the market)

  (EPS CAGR % + Dividend Yield %) / P/E

  ✗Neff> 0.7 (Neff's published traditional edge)

  Price / Tangible Book Value per Share0.99x

  ✓SchlossP/TBV <= 1.00x (app cutoff)

  Book Value per Share Change

  ✗SchlossLatest BVPS >= earliest BVPS over >= 3 years (app rule)

  Revenue / market capitalization+0.5712; #2445/5247 (top 46.6%)

  ✗OshaughnessyTop 10% of eligible cross-section

  (Operating cash flow - capex) / market capitalization

  ✗OshaughnessyTop 10% of eligible cross-section

  Trailing six-month price return through the evaluation date-8.51%; #3347/6202 (top 54.0%)

  ✗OshaughnessyTop 10% of eligible cross-section
• Valuation models33% pass✓ 1✗ 2▾

  Models split on SDRL at $45.46 — fair values range $2.46–$78.67

  Greenblatt fair value$33.23

  ✗Greenblatt-36.8% margin vs $45.46

  Dreman fair value$78.67

  ✓Dreman+42.2% margin vs $45.46

  Pabrai fair value$2.46

  ✗Pabrai-1748.0% margin vs $45.46
• Efficiency38% pass✓ 4✗ 7▾

  5 of 8 flag SDRL's efficiency — Buffett, Greenblatt, Munger +2 more

  Current Ratio2.18

  ✓Graham>= 2.0

  ROIC (3-5 yr avg)-31.7%

  ✗Buffett> 10%

  ROIC - WACC-41.7%

  ✗BuffettPositive (WACC = 10%)

  EBIT / (NWC + Net Fixed Assets)

  ✗Greenblatt> 25%

  Current Ratio Change YoY1.85 -> 2.03

  ✓PiotroskiIncreased YoY

  Revenue / Total Assets Change YoY0.33x -> 0.36x

  ✓PiotroskiImproved YoY

  Current Assets / Current Liabilities2.18

  ✓Dreman> 1.5

  Return on Invested Capital3.0%

  ✗Munger> 15%

  ROIC (high and growing)FY2023: ROIC=7.2%; FY2024: ROIC=9.2%; FY2025: ROIC=1.1%

  ✗AkreLatest 3 consecutive FYs: ROIC > 15% in each

  Reinvestment Rate x ROICN/A (non-positive net income)

  ✗AkreReinvestment Rate * ROIC > 10%

  ROIC (5-year)0/4 years above 12% (latest 1.1%)

  ✗SleepROIC > 12% in a majority of years
• Debt & Leverage50% pass✓ 9✗ 6▾

  6 of 12 pass — Graham, Buffett, Lynch +3 more object

  LT Debt vs Net Current AssetsLT Debt $737.0M vs NCA $544.0M

  ✗GrahamLT Debt <= Net Current Assets

  Debt/Equity & Interest CoverageD/E: 0.26, IC: 2.2x

  ✗BuffettD/E < 0.5 AND Interest Coverage > 5x

  Total Debt / Equity0.26

  ✓Lynch< 0.33

  Cash - Long-term Debt$-254.0M

  ✗LynchPositive preferred

  LT Debt / Total Assets Change14.68% -> 15.53%

  ✗PiotroskiDecreased YoY

  Current Assets / Current Liabilities2.18

  ✓Dreman> 1.5✓SchlossCurrent ratio >= 1.50x (app cutoff)

  Total Debt / Shareholders' Equity0.26

  ✓Dreman< 0.8✓Templeton< 1.0 (fixed cap; proxy for below-sector-median leverage)✓SchlossD/E < 1.00x

  Debt Levels0.26

  ✓MungerDebt/Equity < 0.5✓AkreDebt/Equity < 0.3

  Interest Coverage & Debt/EBITDAIC=2.2x, D/EBITDA=1.7x

  ✗MarksInterest Coverage > 3x; Debt/EBITDA < 4x

  Total Debt / Shareholders Equity0.26

  ✓Ackman<= 1.0

  Negative debt-to-equity (higher means less debt)-0.2617; #1887/4210 (top 44.8%)

  ✗AsnessTop 30% of eligible cross-section