Seadrill (NASDAQ: SDRL) and Nabors Industries (NYSE:NBR) are both small-cap energy companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, analyst recommendations, valuation, profitability, risk, dividends and earnings.

Valuation & Earnings

This table compares Seadrill and Nabors Industries’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Seadrill $2.37 billion 0.04 $1.15 billion N/A N/A
Nabors Industries $2.25 billion 0.85 $535.84 million ($2.55) -2.62

Seadrill has higher revenue and earnings than Nabors Industries.

Profitability

This table compares Seadrill and Nabors Industries’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Seadrill 10.02% 2.69% 1.06%
Nabors Industries -32.35% -13.31% -5.32%

Institutional & Insider Ownership

95.6% of Nabors Industries shares are owned by institutional investors. 4.1% of Nabors Industries shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Dividends

Nabors Industries pays an annual dividend of $0.24 per share and has a dividend yield of 3.6%. Seadrill does not pay a dividend. Nabors Industries pays out -9.4% of its earnings in the form of a dividend. Seadrill has increased its dividend for 3 consecutive years.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Seadrill and Nabors Industries, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Seadrill 5 1 0 0 1.17
Nabors Industries 0 7 18 0 2.72

Seadrill presently has a consensus target price of $3.50, suggesting a potential upside of 1,650.00%. Nabors Industries has a consensus target price of $13.95, suggesting a potential upside of 109.18%. Given Seadrill’s higher possible upside, research analysts clearly believe Seadrill is more favorable than Nabors Industries.

Seadrill 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.

Nabors Industries Company Profile

Nabors Industries Ltd. owns and operates a land-based drilling rig fleet. The Company is a provider of offshore platform drilling rigs in the United States and multiple international markets. The Company conducts its Drilling & Rig Services business through four segments: U.S. Drilling, Canada Drilling, International Drilling and Rig Services. The Company provides wellbore placement services, drilling software and performance tools, drilling equipment and various technologies throughout the oil and gas markets. The Company’s Drilling & Rig Services business comprises land-based and offshore drilling rig operations and other rig services, consisting of equipment manufacturing, rig instrumentation and optimization software. The Company is a provider of directional drilling and measurement while drilling (MWD) systems and services. The Company also provides drilling technology and equipment, and well-site services.

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