TechnipFMC vs. Valaris: Which Energy Stock Is a Better Buy in 2026?

The offshore energy landscape is shifting as global demand for oil and gas requires more complex subsea engineering. Investors must choose between TechnipFMC (NYSE:FTI) and Valaris (NYSE:VAL) to determine which company is better positioned for this recovery.

TechnipFMC provides the sophisticated technology and equipment needed for subsea production, while Valaris operates the actual rigs used to drill those offshore wells. Both companies are vital to the energy supply chain, but they offer distinct ways to play the sector based on your risk tolerance.

The case for TechnipFMC

TechnipFMC focuses on delivering subsea and surface technologies, serving energy projects from initial well setup to final export pipelines. They work with over 40 clients, but two customers provided roughly 15.5% and 14.0% of revenue in 2025, respectively. Customer concentration like this adds a layer of risk to the business since the loss of a major contract could significantly impact operations.

In FY 2025, revenue reached nearly $9.9 billion, representing growth of about 9.4% compared to the previous year. The company reported net income of approximately $963.9 million, resulting in a net margin of close to 9.7%. It also positions itself within the transition toward renewable energy stocks by providing technical expertise for offshore wind and carbon capture projects.

As of its December 2025 balance sheet, the debt-to-equity ratio is roughly 0.6x. This ratio measures total debt against shareholder equity, where a lower number suggests less reliance on borrowed money. The company also reported a current ratio of nearly 1.1x and generated free cash flow of about $1.4 billion. Free cash flow equals cash flow from operations minus capital expenditures.

The case for Valaris

Valaris operates a massive offshore drilling fleet, including 13 drillships and 31 jackups across six continents. Major customers like Petróleo Brasileiro S.A. and BP each account for 10% or more of revenue. Customer concentration like this adds a layer of risk to the business since a single lost contract or customer relationship could hurt the bottom line.

For FY 2025, the company generated revenue of approximately $2.4 billion, which was roughly 0.3% higher than the prior year. Net income for the period was close to $982.8 million, producing a net margin of about 41.5%. This significant net margin indicates that the company is keeping a high percentage of its sales as profit.

Looking at the December 2025 balance sheet, the debt-to-equity ratio is approximately 0.4x. This indicates a relatively conservative use of debt relative to equity for its capital structure. The current ratio is roughly 1.7x, and the company generated free cash flow of nearly $202.7 million. Free cash flow is the cash left over after paying for operations and capital equipment, providing a look at the cash actually available to the business.

Risk profile comparison

TechnipFMC faces risks related to the cyclical nature of the energy industry, where demand depends on volatile commodity prices. As noted in its SEC filings, the company faces stiff competition from major players like Schlumberger. Success also depends on protecting proprietary technology, including new implementations of artificial intelligence.

Valaris deals with similar industry cyclicality, as its drilling contracts are highly sensitive to the budgets of offshore exploration companies. The business competes for contracts with other large offshore drillers like Transocean and Noble. Furthermore, dependence on complex information technology systems exposes the company to risks of cyberattacks that could disrupt drilling operations.

Valuation comparison

TechnipFMC appears cheaper based on Forward P/E, which tracks future earnings estimates, while Valaris has a lower P/S ratio, which measures price against sales.

Sector benchmark uses the SPDR XLE sector ETF.
Valuation metrics sourced from Financial Modeling Prep (FMP) and may differ from other data providers.

Which stock would I buy in 2026?

Both of these companies operate in the energy services space, and both are benefiting from a broader offshore drilling up cycle that has real momentum behind it. But TechnipFMC looks like the much simpler and stronger investment right now.

This company is firing on all cylinders. Its subsea order pipeline has grown to a record level, and management has raised its outlook multiple times on the strength of that momentum. It's generating strong free cash flow and returning the bulk of it to shareholders. For a long-term investment, that’s the kind of execution I like to see.

Valaris, meanwhile, is in the middle of a major transition. Transocean announced a deal to acquire Valaris in an all-stock transaction in early 2026, which introduces deal uncertainty, timeline risk, and the complexity of a large merger integration. That's a lot of moving parts for investors to absorb.

TechnipFMC lets me invest in the offshore energy up cycle without the merger overhang. That's the simpler, cleaner bet.

Sara Appino has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.