Rowan Companies PLC (NYSE: RDC) and Parker Drilling (NYSE:PKD) are both small-cap oils/energy companies, but which is the better investment? We will contrast the two businesses based on the strength of their dividends, profitability, earnings, institutional ownership, risk, analyst recommendations and valuation.

Institutional and Insider Ownership

65.5% of Parker Drilling shares are owned by institutional investors. 0.8% of Rowan Companies PLC shares are owned by company insiders. Comparatively, 3.6% of Parker Drilling shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Rowan Companies PLC and Parker Drilling, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Rowan Companies PLC 3 13 6 0 2.14
Parker Drilling 0 2 5 0 2.71

Rowan Companies PLC presently has a consensus price target of $16.37, suggesting a potential upside of 75.45%. Parker Drilling has a consensus price target of $3.67, suggesting a potential upside of 218.84%. Given Parker Drilling’s stronger consensus rating and higher probable upside, analysts clearly believe Parker Drilling is more favorable than Rowan Companies PLC.

Earnings and Valuation

This table compares Rowan Companies PLC and Parker Drilling’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Rowan Companies PLC $1.43 billion 0.82 $627.20 million ($0.31) -30.10
Parker Drilling $399.09 million 0.40 $29.23 million ($1.30) -0.88

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

Profitability

This table compares Rowan Companies PLC and Parker Drilling’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Rowan Companies PLC -2.62% 0.51% 0.31%
Parker Drilling -41.31% -43.64% -13.96%

Volatility and Risk

Rowan Companies PLC has a beta of 1.77, suggesting that its share price is 77% more volatile than the S&P 500. Comparatively, Parker Drilling has a beta of 1.47, suggesting that its share price is 47% more volatile than the S&P 500.

Summary

Rowan Companies PLC beats Parker Drilling on 9 of the 13 factors compared between the two stocks.

About Rowan Companies PLC

Rowan Companies plc is a provider of offshore contract drilling services to the international oil and gas industry. The Company operates through two segments: deepwater and jack-ups. Its deepwater segment consists of drillship operations. As of December 31, 2016, the Company’s fleet consisted of 29 mobile offshore drilling units, including 25 self-elevating jack-up rigs and four ultra-deepwater drillships. The Company’s fleet operates across the world, including the United States Gulf of Mexico (US GOM), the United Kingdom and Norwegian sectors of the North Sea, the Middle East and Trinidad. As of February 14, 2017, the Company’s drilling fleet consisted of four ultra-deepwater drillships; 19 high-specification cantilever jack-up rigs, and six premium cantilever jack-up rigs. Its jack-ups are capable of drilling wells to maximum depths ranging from 25,000 to 40,000 feet and in maximum water depths ranging from 300 to 550 feet, depending on rig size, location and outfitting.

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.

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