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Why is Diamond Offshore (DO) Down 8% 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 lost about 8% in that time frame.

Will the recent negative trend continue leading up to its next earnings release, or is DO due for a breakout? 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 catalysts.

Recent Earnings

Diamond Offshore Drilling Inc. incurred an adjusted loss of 16 cents per share in first-quarter 2018, narrower than the Zacks Consensus Estimate of a loss of 20 cents. The company reported adjusted earnings of 17 cents per share in the year-ago quarter.

Total revenues came in at $295.5 million, which was lower than the year-ago figure of $374 million. The top line missed the Zacks Consensus Estimate by 0.15%.

First-quarter results were aided by higher floater utilization. However, it was partially offset by lower revenues from the Contract Drilling segment as well as lesser floater dayrates.

Operational Performance

As per its annual report, Diamond Offshore was marketing its jack-up Ocean Scepter for sale and therefore, has not included it in its fleet.

In the first quarter, revenues from the Contract Drilling segment plunged 21% year over year to approximately $288 million.

Floaters recorded an average dayrate of $351,000 compared with $366,000 in the year-earlier quarter. Rig utilization for floaters increased to 52% from 47% in the prior-year quarter.

Financials

As of Mar 31, 2018, Diamond Offshore had approximately $429.7 million in cash and cash equivalents while long-term debt totaled $1,972.6 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

At this time, DO 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 B on the value side, putting it in the second 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 and the magnitude of these revisions indicates a downward shift. Interestingly, 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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