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Why Is Seadrill (SDRL) Down 6.5% Since the Last Earnings Report?
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A month has gone by since the last earnings report for Seadrill Limited (SDRL - Free Report) . Shares have lost about 6.5% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Fourth Quarter 2016 Results
SeaDrill Limited reported strong fourth-quarter 2016 earnings owing to a decrease in operating expenses.
Earnings per share – excluding one-time items − came in at $0.24. The bottom line surpassed the Zacks Consensus Estimate of $0.13 per share but deteriorated from the year-ago adjusted figure of $0.54.
Total operating revenue of $667 million was down 30.4% from $959 million in fourth-quarter 2015. The top line, however, beat the Zacks Consensus Estimate of $634 million.
Segmental Analysis
Floaters:This segment reported revenues of $458 million compared with $644 million in the year-ago quarter. Net operating income was $101 million as against the prior-year quarter figure of $117 million.
Jack-up Rigs: The segment registered revenues of $186 million as against $282 million in the prior-year quarter. Net operating income plummeted to $27 million from the fourth-quarter 2015 figure of $102 million.
Other: Revenues of $23 million were lower than $33 million reported in the prior-year quarter. Operating loss of $10 million compared unfavorably with the prior-year profit of $4 million.
Backlog
As of Feb 28, 2017, total order backlog of SeaDrill was $2.5 billion.
Expenses
SeaDrill incurred operating expenses of $555 million in the reported quarter. This reflects a significant decline from the year-ago quarter figure of $662 million.
Like other offshore contract drillers, SeaDrill too has decided to focus on controlling costs amid plummeting crude prices. As part of the initiative, SeaDrill has trimmed its headcount from 6,995 at year-end 2015 to 5,271 at year-end 2016.
Capital Expenditure & Balance Sheet
As of Dec 31, 2016, SeaDrill had cash and cash equivalents of $1.4 billion and long-term debt of $9,514 million (including current portion). The debt-to-capitalization ratio was approximately 49.9%.
Guidance
The company projects first-quarter operating income of approximately $50 million.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been two revisions lower for the current quarter. In the past month, the consensus estimate has shifted lower by 133.3% due to these changes.
At this time, Seadrill's stock has a poor Growth Score of 'F', a grade with the same score on the momentum front. However, the stock was allocated a grade of 'A' on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'D'. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for value based on our styles scores.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
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Why Is Seadrill (SDRL) Down 6.5% Since the Last Earnings Report?
A month has gone by since the last earnings report for Seadrill Limited (SDRL - Free Report) . Shares have lost about 6.5% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Fourth Quarter 2016 Results
SeaDrill Limited reported strong fourth-quarter 2016 earnings owing to a decrease in operating expenses.
Earnings per share – excluding one-time items − came in at $0.24. The bottom line surpassed the Zacks Consensus Estimate of $0.13 per share but deteriorated from the year-ago adjusted figure of $0.54.
Total operating revenue of $667 million was down 30.4% from $959 million in fourth-quarter 2015. The top line, however, beat the Zacks Consensus Estimate of $634 million.
Segmental Analysis
Floaters:This segment reported revenues of $458 million compared with $644 million in the year-ago quarter. Net operating income was $101 million as against the prior-year quarter figure of $117 million.
Jack-up Rigs: The segment registered revenues of $186 million as against $282 million in the prior-year quarter. Net operating income plummeted to $27 million from the fourth-quarter 2015 figure of $102 million.
Other: Revenues of $23 million were lower than $33 million reported in the prior-year quarter. Operating loss of $10 million compared unfavorably with the prior-year profit of $4 million.
Backlog
As of Feb 28, 2017, total order backlog of SeaDrill was $2.5 billion.
Expenses
SeaDrill incurred operating expenses of $555 million in the reported quarter. This reflects a significant decline from the year-ago quarter figure of $662 million.
Like other offshore contract drillers, SeaDrill too has decided to focus on controlling costs amid plummeting crude prices. As part of the initiative, SeaDrill has trimmed its headcount from 6,995 at year-end 2015 to 5,271 at year-end 2016.
Capital Expenditure & Balance Sheet
As of Dec 31, 2016, SeaDrill had cash and cash equivalents of $1.4 billion and long-term debt of $9,514 million (including current portion). The debt-to-capitalization ratio was approximately 49.9%.
Guidance
The company projects first-quarter operating income of approximately $50 million.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been two revisions lower for the current quarter. In the past month, the consensus estimate has shifted lower by 133.3% due to these changes.
Seadrill Limited Price and Consensus
Seadrill Limited Price and Consensus | Seadrill Limited Quote
VGM Scores
At this time, Seadrill's stock has a poor Growth Score of 'F', a grade with the same score on the momentum front. However, the stock was allocated a grade of 'A' on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'D'. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for value based on our styles scores.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.