Ocean Rig UDW (NASDAQ: ORIG) and Independence Contract Drilling (NYSE:ICD) are both oils/energy companies, but which is the better stock? We will compare the two businesses based on the strength of their risk, valuation, profitabiliy, earnings, dividends, analyst recommendations and institutional ownership.

Profitability

This table compares Ocean Rig UDW and Independence Contract Drilling’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ocean Rig UDW -195.64% 16.32% 5.96%
Independence Contract Drilling -41.32% -7.32% -6.33%

Earnings and Valuation

This table compares Ocean Rig UDW and Independence Contract Drilling’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Ocean Rig UDW N/A N/A N/A ($40.71) -0.01
Independence Contract Drilling $67.84 million 2.13 $7.49 million ($0.76) -5.04

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

Risk and Volatility

Ocean Rig UDW has a beta of 1.71, meaning that its share price is 71% more volatile than the S&P 500. Comparatively, Independence Contract Drilling has a beta of 2.77, meaning that its share price is 177% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Ocean Rig UDW and Independence Contract Drilling, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ocean Rig UDW 0 1 0 0 2.00
Independence Contract Drilling 0 1 6 0 2.86

Ocean Rig UDW presently has a consensus target price of $1.00, indicating a potential upside of 387.57%. Independence Contract Drilling has a consensus target price of $7.10, indicating a potential upside of 85.38%. Given Ocean Rig UDW’s higher possible upside, analysts plainly believe Ocean Rig UDW is more favorable than Independence Contract Drilling.

Insider & Institutional Ownership

12.8% of Ocean Rig UDW shares are owned by institutional investors. Comparatively, 80.6% of Independence Contract Drilling shares are owned by institutional investors. 11.8% of Independence Contract Drilling shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Summary

Independence Contract Drilling beats Ocean Rig UDW on 8 of the 11 factors compared between the two stocks.

About Ocean Rig UDW

Ocean Rig UDW Inc is a Cyprus-based offshore drilling contractor that provides oilfield services for oil and gas exploration, development and production drilling, and specializes in the ultra-deepwater and harsh-environment segment of the drilling industry. The Company owns and operates approximately 13 offshore ultra deepwater drilling units, comprising of ultra deepwater semisubmersible drilling rigs and ultra deepwater drill-ships. The Company’s drilling units include Leiv Eiriksson, Ocean Rig Corcovado, Ocean Rig Poseidon, Ocean Rig Mykonos, Ocean Rig Mylos, Ocean Rig Skyros and Ocean Rig Athena. In addition, the Company, through its wholly owned subsidiary, provides supervisory management services including onshore management to its operating drilling units and drilling units under construction.

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