Pacific Drilling (OTCMKTS: PACDQ) and Pioneer Energy Services (NYSE:PES) are both small-cap oils/energy companies, but which is the better investment? We will compare the two companies based on the strength of their risk, valuation, dividends, analyst recommendations, earnings, profitability and institutional ownership.

Analyst Ratings

This is a summary of current recommendations for Pacific Drilling and Pioneer Energy Services, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Pacific Drilling 0 0 0 0 N/A
Pioneer Energy Services 0 5 4 0 2.44

Pioneer Energy Services has a consensus target price of $4.61, suggesting a potential upside of 43.97%. Given Pioneer Energy Services’ higher possible upside, analysts clearly believe Pioneer Energy Services is more favorable than Pacific Drilling.

Profitability

This table compares Pacific Drilling and Pioneer Energy Services’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Pacific Drilling -101.35% -17.63% -7.68%
Pioneer Energy Services -25.19% -26.46% -9.35%

Volatility and Risk

Pacific Drilling has a beta of 3.22, meaning that its share price is 222% more volatile than the S&P 500. Comparatively, Pioneer Energy Services has a beta of 2.92, meaning that its share price is 192% more volatile than the S&P 500.

Valuation & Earnings

This table compares Pacific Drilling and Pioneer Energy Services’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Pacific Drilling $769.47 million 0.01 -$37.15 million ($20.58) -0.02
Pioneer Energy Services $277.08 million 0.90 -$128.39 million ($1.34) -2.39

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

Institutional and Insider Ownership

0.3% of Pacific Drilling shares are owned by institutional investors. Comparatively, 73.6% of Pioneer Energy Services shares are owned by institutional investors. 6.1% of Pioneer Energy Services shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Summary

Pioneer Energy Services beats Pacific Drilling on 7 of the 13 factors compared between the two stocks.

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.

Pioneer Energy Services Company Profile

Pioneer Energy Services Corp. provides land-based drilling services and production services to a group of independent oil and gas exploration and production companies in the United States and internationally in Colombia. The Company operates through two segments, which include drilling services segment and production services segment. It also provides two of its services (coiled tubing and wireline services) offshore in the Gulf of Mexico. Its drilling services segment provides contract land drilling services to a group of exploration and production companies through the Company’s four drilling divisions in the United States, and internationally in Colombia. Its production services segment provides a range of services to a group of exploration and production companies, with its operations concentrated in the various United States onshore oil and gas producing regions in the Mid-Continent and Rocky Mountain states and in the Gulf Coast.

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