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Diamond Offshore (DO) Down 6.7% Since Earnings Report: Can It Rebound?

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About a month has gone by since the last earnings report for Diamond Offshore Drilling, Inc. (DO - Free Report) . Shares have lost about 6.7% 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 drivers.

Diamond Offshore's Q2 Earnings & Revenues Top Estimates

Diamond Offshore reported second-quarter 2017 adjusted earnings of $0.45 per share that comfortably surpassed the Zacks Consensus Estimate of $0.24. The bottom line also increased from the year-earlier earnings of $0.16. The growth can be attributed to lower expenses and higher ultra-Deepwater and Mid-water floaters dayrate realization.

Total revenue in the quarter of $399.3 million came higher than the year-over-year number of $388.7 million. The top line outpaced the Zacks Consensus Estimate of $386.9 million.

Operational Performance

In the second quarter, revenues from the Contract Drilling segment rose 9.7% year over year to approximately $392.2 million.

Ultra-Deepwater floaters recorded an average dayrate of $436,000 during the quarter, down from $452,000 in the year-earlier quarter. Deepwater floaters realized an average dayrate of $270,000, compared with $301,000 in the year-ago quarter. Mid-water floaters recorded an average dayrate of $397,000, up from $313,000 in the prior-year quarter. Jackup rig dayrates averaged $75,000, down from $335,000 in the second quarter of 2016.

Rig utilization for Ultra-Deepwater floaters increased to 59% from 47% in the year-ago quarter. Utilization of Deepwater floaters rose to 45% from 35% a year ago. Mid-water category rig utilization was 20% as against 30% in the comparable quarter last year, while jackup rig utilization increased to 86% from 13%.
 
Financials

As of Jun 30, Diamond Offshore had approximately $161 million in cash and cash equivalents, while long-term debt totaled $1,981.5 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. There has been one revision higher for the current quarter compared to two lower.

VGM Scores

Currently, the stock has a subpar Growth Score of D, however its Momentum is doing a bit better with a C. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Our style scores indicate that the stock is more suitable for value investors than momentum investors.

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 looking for an inline return from the stock in the next few months.




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