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Why Is Diamond Offshore (DO) Down 8.5% Since Last Earnings Report?

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It has been about a month since the last earnings report for Diamond Offshore Drilling (DO - Free Report) . Shares have lost about 8.5% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Diamond Offshore Drilling 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.

Second-Quarter 2018 Results

Diamond Offshore Drilling Inc. incurred an adjusted loss of 33 cents per share in second-quarter 2018, narrower than the Zacks Consensus Estimate of a loss of 41 cents. The company had reported adjusted earnings of 45 cents in the year-ago quarter.
 
Total revenues came in at $269 million, which missed the Zacks Consensus Estimate of $283 million. The top line also declined from the year-ago quarter figure of $399 million.

The quarterly results were hurt by lower revenues from the Contract Drilling segment as well as lesser floater dayrates. These were partially offset by higher floater utilization.

Operational Performance

As per the annual report, Diamond Offshore has put up Ocean Scepter for sale and not included the jack-up in its fleet.

In the second quarter, revenues from the Contract Drilling segment plunged 32.3% year over year to approximately $265.4 million.

Floaters recorded an average dayrate of $317,000 compared with $391,000 in the year-earlier quarter. Rig utilization for floaters increased to 53% from 47% in the prior-year quarter.

Financials

As of Jun 30, 2018, Diamond Offshore had approximately $144.2 million in cash and cash equivalents while long-term debt totaled $1,973.1 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -537.08% due to these changes.

VGM Scores

Currently, Diamond Offshore Drilling 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 style scores.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Diamond Offshore Drilling has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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