Analyzing Rowan Companies PLC (NYSE:RDC) and Diamond Offshore Drilling (DO)
Rowan Companies PLC (NYSE: RDC) and Diamond Offshore Drilling (NYSE:DO) are both small-cap oils/energy companies, but which is the better investment? We will contrast the two companies based on the strength of their institutional ownership, risk, analyst recommendations, profitabiliy, dividends, valuation and earnings.
This is a summary of current recommendations for Rowan Companies PLC and Diamond Offshore Drilling, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Rowan Companies PLC||3||13||7||0||2.17|
|Diamond Offshore Drilling||7||11||3||0||1.81|
Rowan Companies PLC presently has a consensus price target of $16.93, indicating a potential upside of 51.52%. Diamond Offshore Drilling has a consensus price target of $15.82, indicating a potential upside of 37.00%. Given Rowan Companies PLC’s stronger consensus rating and higher possible upside, analysts clearly believe Rowan Companies PLC is more favorable than Diamond Offshore Drilling.
This table compares Rowan Companies PLC and Diamond Offshore Drilling’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Rowan Companies PLC||12.12%||2.95%||1.77%|
|Diamond Offshore Drilling||-29.01%||4.76%||2.75%|
Earnings & Valuation
This table compares Rowan Companies PLC and Diamond Offshore Drilling’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Rowan Companies PLC||$1.72 billion||0.82||$874.70 million||$1.64||6.81|
|Diamond Offshore Drilling||$1.45 billion||1.09||$634.05 million||($3.18)||-3.63|
Rowan Companies PLC has higher revenue and earnings than Diamond Offshore Drilling. Diamond Offshore Drilling is trading at a lower price-to-earnings ratio than Rowan Companies PLC, indicating that it is currently the more affordable of the two stocks.
Risk & Volatility
Rowan Companies PLC has a beta of 1.75, indicating that its stock price is 75% more volatile than the S&P 500. Comparatively, Diamond Offshore Drilling has a beta of 1.1, indicating that its stock price is 10% more volatile than the S&P 500.
Rowan Companies PLC beats Diamond Offshore Drilling on 9 of the 12 factors compared between the two stocks.
About Rowan Companies PLC
Rowan Companies plc is a provider of offshore contract drilling services to the international oil and gas industry. The Company operates through two segments: deepwater and jack-ups. Its deepwater segment consists of drillship operations. As of December 31, 2016, the Company’s fleet consisted of 29 mobile offshore drilling units, including 25 self-elevating jack-up rigs and four ultra-deepwater drillships. The Company’s fleet operates across the world, including the United States Gulf of Mexico (US GOM), the United Kingdom and Norwegian sectors of the North Sea, the Middle East and Trinidad. As of February 14, 2017, the Company’s drilling fleet consisted of four ultra-deepwater drillships; 19 high-specification cantilever jack-up rigs, and six premium cantilever jack-up rigs. Its jack-ups are capable of drilling wells to maximum depths ranging from 25,000 to 40,000 feet and in maximum water depths ranging from 300 to 550 feet, depending on rig size, location and outfitting.
About Diamond Offshore Drilling
Diamond Offshore Drilling, Inc. provides contract drilling services to the energy industry. As of December 31, 2016, the Company had a fleet of 24 offshore drilling rigs. As of December 31, 2016, its fleet consisted of four drillships, 19 semisubmersible rigs and one jack-up rig. Its fleet enables it to offer a range of services, primarily in the floater market, including ultra-deepwater, deepwater and mid-water. The principal markets for its offshore contract drilling services are the Gulf of Mexico, including the United States and Mexico; South America, principally offshore Brazil, and Trinidad and Tobago; Australia and Southeast Asia, including Malaysia, Indonesia and Vietnam; Europe, principally offshore the United Kingdom and Norway; East and West Africa; the Mediterranean, and the Middle East. The Company provides offshore drilling services to a customer base that includes independent oil and gas companies, and government-owned oil companies.
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