North Atlantic Drilling (NYSE: NADL) and Ring Energy (NYSE:REI) 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 profitability, dividends, institutional ownership, earnings, risk, analyst recommendations and valuation.

Earnings & Valuation

This table compares North Atlantic Drilling and Ring Energy’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
North Atlantic Drilling $343.90 million 0.08 $157.90 million ($7.96) -0.15
Ring Energy $42.26 million 15.78 $21.77 million N/A N/A

North Atlantic Drilling has higher revenue and earnings than Ring Energy.

Analyst Recommendations

This is a summary of current ratings and target prices for North Atlantic Drilling and Ring Energy, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
North Atlantic Drilling 1 0 0 0 1.00
Ring Energy 0 0 6 0 3.00

North Atlantic Drilling currently has a consensus target price of $2.00, suggesting a potential upside of 66.67%. Ring Energy has a consensus target price of $18.60, suggesting a potential upside of 50.97%. Given North Atlantic Drilling’s higher probable upside, equities analysts clearly believe North Atlantic Drilling is more favorable than Ring Energy.

Profitability

This table compares North Atlantic Drilling and Ring Energy’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
North Atlantic Drilling -54.37% -55.80% -6.69%
Ring Energy N/A N/A N/A

Institutional & Insider Ownership

5.7% of North Atlantic Drilling shares are owned by institutional investors. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Summary

Ring Energy beats North Atlantic Drilling on 6 of the 10 factors compared between the two stocks.

North Atlantic Drilling Company Profile

North Atlantic Drilling Ltd. operates as an offshore drilling contractor in the North Atlantic region. The company provides harsh environment offshore drilling services to the oil and gas industry primarily in Norway, the United Kingdom, and the Russian Federation. As of December 31, 2016, it owned seven offshore drilling rigs, including three semi-submersibles, one ultra-deep water drillship, and three jack-up rigs. The company was founded in 2011 and is headquartered in Hamilton, Bermuda. North Atlantic Drilling Ltd. is a subsidiary of Seadrill Limited.

Ring Energy Company Profile

Ring Energy, Inc. acquires, explores for, develops, and produces oil and natural gas in Texas and Kansas, the United States. As of December 31, 2016, its proved reserves consisted of approximately 27.7 million barrel of oil equivalent. The company also owns interests in 32,663 net developed and undeveloped acres in Andrews and Gaines counties, and 20,490 net developed and undeveloped acres in Reeves and Culberson counties, Texas; and 14,549 net developed and undeveloped acres in Kansas. It primarily sells its oil and natural gas production to end users, marketers, and other purchasers. The company was formerly known as Transglobal Mining Corp. and changed its name to Ring Energy, Inc. in March 2008. Ring Energy, Inc. was founded in 2004 and is headquartered in Midland, Texas.

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