NEW YORK (TheStreet) -- Shares of Diamond Offshore Drilling Inc. are down 2.61% to $38.05 after the company was downgraded to "sell" from "neutral" at Goldman Sachsaon Monday. A price target of $26.50 was set for the deepwater drilling contractor company, down from its previous mark of $36. The firm said that fundamentals for offshore drillers continue to worsen, with more rigs idled and day rates dropping as new rigs enter supply. Must Read: Warren Buffett's 25 Favorite Stocks STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more. "We believe a lower target multiple is warranted to reflect weakening fundamentals for offshore drillers, and a sharp cut to 2016 EPS estimates when we expect EPS to be 37% lower than in 2014," said analysts at Goldman Sachs. Separately, TheStreet Ratings team rates DIAMOND OFFSHRE DRILLING INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation: "We rate DIAMOND OFFSHRE DRILLING INC (DO) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity." Highlights from the analysis by TheStreet Ratings Team goes as follows: Despite its growing revenue, the company underperformed as compared with the industry average of 9.9%. Since the same quarter one year prior, revenues slightly increased by 4.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share. 44.52% is the gross profit margin for DIAMOND OFFSHRE DRILLING INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 7.13% trails the industry average. Despite currently having a low debt-to-equity ratio of 0.50, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that DO's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.82 is high and demonstrates strong liquidity. The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Energy Equipment & Services industry. The net income has significantly decreased by 44.4% when compared to the same quarter one year ago, falling from $94.75 million to $52.65 million. The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the Energy Equipment & Services industry and the overall market, DIAMOND OFFSHRE DRILLING INC's return on equity is significantly below that of the industry average and is below that of the S&P 500. You can view the full analysis from the report here: DO Ratings Report STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.
Click to view a price quote on DO. Click to research the Energy industry.
from Latest TSC Headlines http://ift.tt/1pQPVQH
No comments:
Post a Comment