Critical Comparison: Seadrill (SDRL) & Diamond Offshore Drilling (DO)
Seadrill (NASDAQ: SDRL) and Diamond Offshore Drilling (NYSE:DO) are both energy companies, but which is the superior business? We will contrast the two businesses based on the strength of their valuation, profitability, dividends, risk, institutional ownership, earnings and analyst recommendations.
This is a breakdown of current ratings and target prices for Seadrill and Diamond Offshore Drilling, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Diamond Offshore Drilling||8||12||3||0||1.78|
Diamond Offshore Drilling has a consensus price target of $14.39, suggesting a potential downside of 6.89%. Given Diamond Offshore Drilling’s stronger consensus rating and higher probable upside, analysts clearly believe Diamond Offshore Drilling is more favorable than Seadrill.
Valuation and Earnings
This table compares Seadrill and Diamond Offshore Drilling’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Seadrill||$2.37 billion||0.06||$1.15 billion||N/A||N/A|
|Diamond Offshore Drilling||$1.48 billion||1.43||$660.47 million||$1.24||12.46|
Seadrill has higher revenue and earnings than Diamond Offshore Drilling.
This table compares Seadrill and Diamond Offshore Drilling’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Diamond Offshore Drilling||11.19%||5.77%||3.42%|
Diamond Offshore Drilling beats Seadrill on 7 of the 9 factors compared between the two stocks.
Seadrill Company Profile
Seadrill Limited is an offshore drilling contractor providing offshore drilling services to the oil and gas industry. The Company’s primary business is the ownership and operation of drillships, semi-submersible rigs and jack-up rigs for operations in shallow-, mid-, deep-, and ultra deepwater areas, and in benign and harsh environments. The Company’s segments are Floaters and Jack-ups. The Company offers services encompassing drilling, completion and maintenance of offshore exploration and production wells. The Company contracts its drilling units primarily on a dayrate basis to drill wells for its customers. The Company has a fleet of approximately 38 offshore drilling units consisting of over 12 semi-submersible rigs, approximately seven drillships and over 19 jack-up rigs in operation, and contracts for the construction of approximately 13 offshore drilling units. The Company also provides management services to certain unconsolidated companies in which its holds investments.
Diamond Offshore Drilling Company Profile
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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