Seadrill Limited (NYSE: SDRL) and Rowan Companies PLC (NYSE:RDC) are both small-cap oils/energy companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, institutional ownership, profitabiliy, analyst recommendations, risk, valuation and dividends.

Profitability

This table compares Seadrill Limited and Rowan Companies PLC’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Seadrill Limited -6.99% 5.67% 2.59%
Rowan Companies PLC 12.12% 2.95% 1.77%

Risk and Volatility

Seadrill Limited has a beta of 2.65, suggesting that its stock price is 165% more volatile than the S&P 500. Comparatively, Rowan Companies PLC has a beta of 1.75, suggesting that its stock price is 75% more volatile than the S&P 500.

Valuation & Earnings

This table compares Seadrill Limited and Rowan Companies PLC’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Seadrill Limited $2.65 billion 0.10 $1.44 billion ($0.38) -1.37
Rowan Companies PLC $1.72 billion 0.85 $874.70 million $1.64 7.11

Seadrill Limited has higher revenue and earnings than Rowan Companies PLC. Seadrill Limited 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.

Institutional and Insider Ownership

28.8% of Seadrill Limited shares are held by institutional investors. 0.8% of Rowan Companies PLC shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of current ratings and recommmendations for Seadrill Limited and Rowan Companies PLC, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Seadrill Limited 1 0 0 0 1.00
Rowan Companies PLC 3 13 7 0 2.17

Rowan Companies PLC has a consensus target price of $16.93, suggesting a potential upside of 45.15%. Given Rowan Companies PLC’s stronger consensus rating and higher probable upside, analysts plainly believe Rowan Companies PLC is more favorable than Seadrill Limited.

Summary

Rowan Companies PLC beats Seadrill Limited on 8 of the 14 factors compared between the two stocks.

Seadrill Limited Company Profile

Seadrill Limited is an offshore drilling contractor providing offshore drilling services to the oil and gas industry. The Company’s primary business is the ownership and operation of drillships, semi-submersible rigs and jack-up rigs for operations in shallow-, mid-, deep-, and ultra deepwater areas, and in benign and harsh environments. The Company’s segments are Floaters and Jack-ups. The Company offers services encompassing drilling, completion and maintenance of offshore exploration and production wells. The Company contracts its drilling units primarily on a dayrate basis to drill wells for its customers. The Company has a fleet of approximately 38 offshore drilling units consisting of over 12 semi-submersible rigs, approximately seven drillships and over 19 jack-up rigs in operation, and contracts for the construction of approximately 13 offshore drilling units. The Company also provides management services to certain unconsolidated companies in which its holds investments.

Rowan Companies PLC Company Profile

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.

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