Diamond Offshore Drilling (NYSE: DO) and Transocean (NYSE:RIG) are both mid-cap oils/energy companies, but which is the superior business? We will compare the two businesses based on the strength of their analyst recommendations, institutional ownership, dividends, earnings, profitability, valuation and risk.
Volatility & Risk
Diamond Offshore Drilling has a beta of 1.19, meaning that its share price is 19% more volatile than the S&P 500. Comparatively, Transocean has a beta of 1.76, meaning that its share price is 76% more volatile than the S&P 500.
Insider & Institutional Ownership
67.8% of Transocean shares are owned by institutional investors. 0.0% of Diamond Offshore Drilling shares are owned by insiders. Comparatively, 0.3% of Transocean shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.
Valuation and Earnings
This table compares Diamond Offshore Drilling and Transocean’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Diamond Offshore Drilling||$1.48 billion||1.39||$660.47 million||$1.24||12.10|
|Transocean||$3.42 billion||1.21||$1.83 billion||($2.87)||-3.70|
Transocean has higher revenue and earnings than Diamond Offshore Drilling. Transocean is trading at a lower price-to-earnings ratio than Diamond Offshore Drilling, indicating that it is currently the more affordable of the two stocks.
This is a summary of recent ratings and price targets for Diamond Offshore Drilling and Transocean, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Diamond Offshore Drilling||8||12||3||0||1.78|
Diamond Offshore Drilling currently has a consensus target price of $14.39, suggesting a potential downside of 4.09%. Transocean has a consensus target price of $12.53, suggesting a potential upside of 18.12%. Given Transocean’s stronger consensus rating and higher possible upside, analysts plainly believe Transocean is more favorable than Diamond Offshore Drilling.
This table compares Diamond Offshore Drilling and Transocean’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%|
Transocean beats Diamond Offshore Drilling on 9 of the 14 factors compared between the two stocks.
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.
Transocean Company Profile
Transocean Ltd. is an international provider of offshore contract drilling services for oil and gas wells. The Company’s primary business is to contract its drilling rigs, related equipment and work crews on a dayrate basis to drill oil and gas wells. As of February 9, 2017, it owned or had partial ownership interests in and operated 56 mobile offshore drilling units. As of February 9, 2017, its fleet consisted of 30 floaters, seven harsh environment floaters, three deepwater floaters, six midwater floaters and 10 high-specification jackups. As February 9, 2017, it also had four ultra-deepwater drillships and five high-specification jackups under construction or under contract to be constructed. Its contract drilling services operations are spread across oil and gas exploration and development areas throughout the world. The Company’s drilling fleet can be characterized as floaters, including drillships and semisubmersibles, and jackups.
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