Atwood Oceanics (NYSE: ATW) and Pacific Drilling (NYSE:PACD) are both small-cap oils/energy companies, but which is the better business? We will compare the two companies based on the strength of their institutional ownership, profitability, risk, earnings, analyst recommendations, dividends and valuation.

Analyst Recommendations

This is a summary of current ratings and recommmendations for Atwood Oceanics and Pacific Drilling, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Atwood Oceanics 3 16 4 0 2.04
Pacific Drilling 0 1 0 0 2.00

Atwood Oceanics currently has a consensus target price of $11.35, suggesting a potential upside of 73.77%. Given Atwood Oceanics’ stronger consensus rating and higher possible upside, research analysts plainly believe Atwood Oceanics is more favorable than Pacific Drilling.

Institutional and Insider Ownership

92.0% of Atwood Oceanics shares are held by institutional investors. Comparatively, 6.3% of Pacific Drilling shares are held by institutional investors. 1.2% of Atwood Oceanics shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Volatility & Risk

Atwood Oceanics has a beta of 2.36, suggesting that its stock price is 136% more volatile than the S&P 500. Comparatively, Pacific Drilling has a beta of 2.53, suggesting that its stock price is 153% more volatile than the S&P 500.

Profitability

This table compares Atwood Oceanics and Pacific Drilling’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Atwood Oceanics -3.06% 2.25% 1.59%
Pacific Drilling -52.69% -10.83% -4.83%

Valuation and Earnings

This table compares Atwood Oceanics and Pacific Drilling’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Atwood Oceanics $605.28 million 0.87 $296.89 million ($0.20) -32.65
Pacific Drilling $532.97 million 0.03 $195.79 million ($13.19) -0.06

Atwood Oceanics has higher revenue and earnings than Pacific Drilling. Atwood Oceanics is trading at a lower price-to-earnings ratio than Pacific Drilling, indicating that it is currently the more affordable of the two stocks.

Summary

Atwood Oceanics beats Pacific Drilling on 12 of the 13 factors compared between the two stocks.

Atwood Oceanics Company Profile

Atwood Oceanics, Inc. is an offshore drilling company engaged in the drilling and completion of exploration and development wells for the global oil and gas industry. The Company owns various types of drilling rigs, such as Ultra-Deepwater Rigs, Deepwater Semisubmersibles and Jackups. Its Ultra-deepwater Rigs and Deepwater Semisubmersibles include Atwood Achiever, Atwood Archer, Atwood Admiral, Atwood Advantage, Atwood Condor, Atwood Eagle and Atwood Osprey. Its Jackup Rigs included Atwood Mako, Atwood Manta, Atwood Aurora, Atwood Beacon and Atwood Orca. The Atwood Mako and Atwood Manta, both approximately 400-foot water depth Pacific Class jackup rigs, are operating offshore Vietnam and offshore Thailand. The Atwood Aurora, an approximately 350-foot water depth jackup, is operating offshore West Africa. The Atwood Beacon, an approximately 400-foot water depth jackup, is operating in the Mediterranean Sea.

Pacific Drilling Company Profile

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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