Financial Analysis: Rowan Companies PLC (RDC) and Seadrill (NASDAQ:SDRL)

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

Earnings and Valuation

This table compares Rowan Companies PLC and Seadrill’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Rowan Companies PLC $1.43 billion 0.88 $627.20 million ($0.31) -32.06
Seadrill $2.65 billion 0.06 $1.44 billion N/A N/A

Seadrill has higher revenue and earnings than Rowan Companies PLC.

Analyst Ratings

This is a summary of current ratings and target prices for Rowan Companies PLC and Seadrill, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Rowan Companies PLC 3 13 6 0 2.14
Seadrill 5 1 0 0 1.17

Rowan Companies PLC currently has a consensus price target of $16.37, indicating a potential upside of 64.68%. Seadrill has a consensus price target of $3.50, indicating a potential upside of 1,066.67%. Given Seadrill’s higher probable upside, analysts clearly believe Seadrill is more favorable than Rowan Companies PLC.

Profitability

This table compares Rowan Companies PLC and Seadrill’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%
Seadrill 10.02% 2.69% 1.06%

Summary

Seadrill beats Rowan Companies PLC on 6 of the 9 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 Seadrill

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.

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