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Rowan (RDC) Up 9.8% Since Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Rowan Companies PLC (RDC - Free Report) . Shares have added about 9.8% in that time frame.

Will the recent positive trend continue leading up to its next earnings release, or is RDC due for a pullback? 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.

Recent Earnings

Rowan reported adjusted first-quarter 2018 loss from continuing operations of 89 cents per share, wider than the Zacks Consensus Estimate of a loss of 86 cents. The company had posted profit of 7 cents per share in the year-ago quarter. The decline was mainly due to a considerable fall in dayrates and lower rig utilization.
 
Total revenues were $211.2 million in the first quarter, down from $374.3 million in the prior-year quarter. Revenues also lagged the Zacks Consensus Estimate of $216 million.
 
Dayrates and Utilization 

The company's deepwater rigs had a dayrate of $574,600 compared with $592,100 in the year-ago quarter. Jackup rigs saw a dayrate of $138,900 against $135,700 in the prior-year quarter.

The overall dayrate of all rigs was $176,700 compared with $203,500 in first-quarter 2017. Average utilization of the company's rigs was 50% against 75% in the comparable quarter last year.

Total Expenses

In the first quarter, the company reported $282.2 million in costs compared with $298 million in the year-quarter.

Financials

As of Mar 31, 2018, the company's cash balance was $1,214.1 million and long-term debt (including current maturities) was $2,510.5 million. The long-term debt-to-capitalization ratio was 32.2%.

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.

Rowan Companies PLC Price and Consensus

 

Rowan Companies PLC Price and Consensus | Rowan Companies PLC Quote

VGM Scores

Currently, RDC 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 C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. 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, RDC has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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