Analyzing Parker Drilling (PKD) and Diamond Offshore Drilling (DO)

Parker Drilling (NYSE: PKD) and Diamond Offshore Drilling (NYSE:DO) are both energy companies, but which is the superior investment? We will compare the two companies based on the strength of their profitability, earnings, dividends, risk, analyst recommendations, valuation and institutional ownership.

Valuation & Earnings

This table compares Parker Drilling and Diamond Offshore Drilling’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Parker Drilling $427.00 million 0.44 -$230.81 million ($1.08) -1.25
Diamond Offshore Drilling $1.60 billion 1.69 -$372.50 million $1.21 16.32

Parker Drilling has higher earnings, but lower revenue than Diamond Offshore Drilling. Parker 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.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Parker Drilling and Diamond Offshore Drilling, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Parker Drilling 0 2 1 0 2.33
Diamond Offshore Drilling 10 11 1 0 1.59

Diamond Offshore Drilling has a consensus price target of $14.49, suggesting a potential downside of 26.63%. Given Diamond Offshore Drilling’s higher probable upside, analysts plainly believe Diamond Offshore Drilling is more favorable than Parker Drilling.

Volatility and Risk

Parker Drilling has a beta of 1.51, indicating that its share price is 51% more volatile than the S&P 500. Comparatively, Diamond Offshore Drilling has a beta of 1.28, indicating that its share price is 28% more volatile than the S&P 500.

Institutional & Insider Ownership

63.5% of Parker Drilling shares are held by institutional investors. 3.6% of Parker Drilling shares are held by company insiders. Comparatively, 0.0% of Diamond Offshore Drilling shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Profitability

This table compares Parker Drilling and Diamond Offshore Drilling’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Parker Drilling -33.06% -38.07% -11.82%
Diamond Offshore Drilling 10.86% 6.23% 3.77%

Summary

Diamond Offshore Drilling beats Parker Drilling on 8 of the 13 factors compared between the two stocks.

About Parker Drilling

Parker Drilling Company (Parker Drilling) is a provider of contract drilling, and drilling-related services and rental tools and services. The Company’s business consists of two business lines: drilling services and rental tools services. Its Rental Tools Services business includes U.S. Rental Tools and International Rental Tools segments, and its Drilling Services business includes its U.S. (Lower 48) Drilling, and International & Alaska Drilling segments. In its Drilling Services business, the Company drills oil and gas wells for customers in both the United States and international markets. In its Rental Tools Services business, the Company provides rental equipment and services to exploration and production (E&P) companies, drilling contractors and service companies on land and offshore in the United States and select international markets. As of December 31, 2016, the Company had operations in 20 countries.

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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