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Rowan (RDC) Down 11.7% Since Earnings Report: Can It Rebound?

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It has been more than a month since the last earnings report for Rowan Companies (RDC - Free Report) . Shares have lost about 11.7% 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.

Rowan Companies Incurs Narrower-than-Expected Q2 Loss

Rowan Companies reported better-than-expected second-quarter 2017 results owning to recent contract awards along with lower costs and expenses, partially offset by slow industry recovery, fall in dayrates and average utilization.

The company’s adjusted second-quarter 2017 loss from continuing operations was $0.25 per share, which was narrower than the Zacks Consensus Estimate of a loss of $0.32 per share. The bottom line deteriorated significantly from the year-ago quarter profit of $0.75 per share.

Total revenue was $320 million in the second quarter compared with $612 million in the prior-year quarter. Revenues, however, beat the Zacks Consensus Estimate of $300 million.
 
Dayrates and Utilization

The company's deepwater rigs had a dayrate of $599,600 compared with $607,000 in the year-ago quarter. Jackup rigs saw a dayrate of $129,900 compared with $164,900 in the prior year quarter.

The overall dayrate of all rigs was $186,000 compared with $239,400 in second-quarter 2016. Average utilization of the company's rigs was 69% compared with 76% in the comparable quarter last year.

As of Jun 30, 2017, the company has a fleet of 29 mobile offshore drilling units including 25 jack-up rigs and four ultra-deepwater drillships.

Total Costs and Expenses

For the quarter, the company’s costs and expenses were $294.1 million compared with $335.6 million in the year-ago comparable period. The decline in expenses can be attributed to 19.3% fall in direct operating costs and 15.7% drop in selling, general and administrative costs.

Financials

As of Jun 30, 2017, the company's cash balance was $1,145.2 million and long-term debt (excluding current maturities) was $2,516.6 million. The long-term debt-to-capitalization ratio was 32.2%.

How have estimates been moving since then?

Analysts were quiet during the past month as none of them issued any earnings estimate revisions.

Rowan Companies PLC Price and Consensus

 

Rowan Companies PLC Price and Consensus | Rowan Companies PLC Quote

VGM Scores

Currently, the stock has a poor Growth Score of F, however its momentum is doing a lot better with a A. Charting the exact same path, the stock was also 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 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 equally suitable for value and momentum investors.

Outlook

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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