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Why Is Diamond Offshore Drilling, Inc. (DO) Up 6.32% Since Its Last Earnings Report?

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A month has gone by since the last earnings report for Diamond Offshore Drilling, Inc. (DO - Free Report) . Shares have added about 6.3% in that time frame.

Will the recent positive trend continue leading up to its next earnings release, or is DO due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Recent Earnings

Diamond Offshore Drilling Inc. reported fourth-quarter 2017 adjusted loss of 5 cents per share compared to the Zacks Consensus Estimate of a breakeven. The company reported earnings of 85 cents per share in the year-earlier quarter..

In 2017, the company registered earnings of 82 cents per share, which missed the Zacks Consensus Estimate of 86 cents and declined from $1.77 in the year-ago quarter.

Total revenues of $346.2 million declined from the year-ago figure of $391.9 million but beat the Zacks Consensus Estimate of $344.1 million.

In 2017, total revenue decreased 7.2% year over year to $1,485.7 million. The figure topped the Zacks Consensus Estimate of $1,478.0 million.

The result was affected due to lower dayrates and rig utilization from deepwater floaters, mid-water floaters and jackups. It was partially offset by higher utilization of ultra-deepwater floaters, the contract extensions for Ocean Valor and Ocean Valiant.

Operational Performance

In the fourth quarter, revenues from the Contract Drilling segment plunged 12.2% year over year to approximately $337.8 million but beat the Zacks Consensus Estimate of $326 million.

Ultra-Deepwater floaters recorded an average dayrate of $424,000 during the quarter against $456,000 in the year-earlier quarter. Deepwater floaters realized an average dayrate of $175,000 compared with $287,000 in the year-ago quarter. Mid-water floaters recorded an average dayrate of $266,000 against $478,000 in the prior-year quarter. Jackups were at an average dayrate of $75,000 and were unchanged from the preceding quarter

Rig utilization for Ultra-Deepwater floaters increased to 65% from 49% in the year-ago quarter. Utilization of Deepwater floaters fell to 37% from 39% a year ago. Mid-water category rig utilization was 17% against 35% in the year-ago quarter. Jackups category rig utilization was 65% compared with  95% in the preceding quarter.

Financials

As of Dec 31, 2017, Diamond Offshore had approximately $376 million in cash and cash equivalents, while long-term debt totaled $1,972.2 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. There have been six revisions lower for the current quarter.

VGM Scores

Currently, DO has a poor Growth Score of F, a grade with the same score on the momentum front. The stock was allocated a grade of B on the value side, putting it in the second quintile.

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 and the magnitude of these revisions indicates a downward shift. Notably, DO has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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