Reviewing Diamond Offshore Drilling (DO) & Pacific Drilling (PACDQ)
Diamond Offshore Drilling (NYSE: DO) and Pacific Drilling (OTCMKTS:PACDQ) are both energy companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, dividends, analyst recommendations, risk, profitability, valuation and earnings.
Risk and Volatility
Diamond Offshore Drilling has a beta of 1.29, meaning that its stock price is 29% more volatile than the S&P 500. Comparatively, Pacific Drilling has a beta of 3.21, meaning that its stock price is 221% more volatile than the S&P 500.
This table compares Diamond Offshore Drilling and Pacific Drilling’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Diamond Offshore Drilling||$1.60 billion||1.43||-$372.50 million||$1.21||13.75|
|Pacific Drilling||$769.47 million||0.02||-$37.15 million||($20.58)||-0.03|
Pacific Drilling has lower revenue, but higher earnings than Diamond Offshore Drilling. Pacific Drilling is trading at a lower price-to-earnings ratio than Diamond Offshore Drilling, indicating that it is currently the more affordable of the two stocks.
This table compares Diamond Offshore Drilling and Pacific Drilling’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Diamond Offshore Drilling||10.86%||6.23%||3.77%|
Institutional and Insider Ownership
0.4% of Pacific Drilling shares are held by institutional investors. 0.0% of Diamond Offshore Drilling shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.
This is a summary of recent recommendations and price targets for Diamond Offshore Drilling and Pacific Drilling, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Diamond Offshore Drilling||7||12||2||0||1.76|
Diamond Offshore Drilling presently has a consensus target price of $14.25, suggesting a potential downside of 14.33%. Given Diamond Offshore Drilling’s higher probable upside, equities analysts clearly believe Diamond Offshore Drilling is more favorable than Pacific Drilling.
Diamond Offshore Drilling beats Pacific Drilling on 9 of the 12 factors compared between the two stocks.
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.
About Pacific Drilling
Pacific Drilling S.A. is an international offshore drilling contractor. The Company provides offshore drilling services to the oil and natural gas industry through the use of high-specification rigs. The Company’s primary business is to contract its high-specification rigs, related equipment and work crews, primarily on a day rate basis, to drill wells for its clients. The Company is engaged in drillships segment. The Company focuses on the high-specification segment of the floating rig market. The Company considers high-specification requirements to include rigs in water depths of approximately 7,500 feet or projects requiring advanced operating capabilities, such as hook-loads (>800 tons), accommodations (over 200 beds), mud storage and pumping capacity, and deck-load and space capabilities. The Company’s contract drillships operate in the deepwater regions of the United States, Gulf of Mexico and Nigeria.
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