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Diamond Offshore Drilling (DO) Down 8.3% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Diamond Offshore Drilling (DO - Free Report) . Shares have lost about 8.3% 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 the most recent earnings report in order to get a better handle on the important catalysts.

Diamond Offshore Q3 Loss Narrower-Than-Expected, Revenues Beat

Diamond Offshore Drilling Inc. incurred an adjusted loss of 26 cents per share in third-quarter 2018, narrower than the Zacks Consensus Estimate of a loss of 38 cents. The company had reported adjusted earnings of 25 cents in the year-ago quarter.
 
Total revenues came in at $286.3 million, which beat the Zacks Consensus Estimate of $280 million. However, the top line declined from the year-ago quarter's figure of $366 million.

The quarterly results improved on the back of higher floater utilization. This was partially offset by lower revenues in the Contract Drilling segment and lesser floater dayrates.
 
Operational Performance

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

In the third quarter, revenues in the Contract Drilling segment plunged 21.5% year over year to approximately $280.7 million.

Floaters recorded an average dayrate of $333,000 compared with $357,000 in the year-earlier quarter. Rig utilization for floaters increased to 54% from 46% in the prior-year quarter.

Financials

As of Sep 30, 2018, Diamond Offshore had approximately $201.9 million in cash and cash equivalents while long-term debt totaled $1,973.5 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

At this time, Diamond Offshore Drilling has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, 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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