NEW YORK (TheStreet) -- SeaDrill (SDRL - Get Report) was falling -4.9% to $37.67 Tuesday after launching $1 billion 2019 convertible bond and a voluntary incentive payment offer to convert the existing $650 million 3.375% convertible bond due 2017.
The senior, unsecured bonds will be convertible into common shares. The bonds are expected to have an annual coupon range of 2% to 2.5% payable semi-annually in arrear, and have a conversion premium of 30% to 35% over the reference share price.
The bonds are expected to be issued on or around July 16, 2014.
TheStreet Ratings team rates SEADRILL LTD as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate SEADRILL LTD (SDRL) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, notable return on equity, good cash flow from operations, expanding profit margins and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Energy Equipment & Services industry. The net income increased by 650.1% when compared to the same quarter one year prior, rising from $409.00 million to $3,068.00 million.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Energy Equipment & Services industry and the overall market, SEADRILL LTD's return on equity significantly exceeds that of both the industry average and the S&P 500.
- Net operating cash flow has significantly increased by 55.08% to $656.00 million when compared to the same quarter last year. In addition, SEADRILL LTD has also modestly surpassed the industry average cash flow growth rate of 49.39%.
- The gross profit margin for SEADRILL LTD is rather high; currently it is at 57.08%. Regardless of SDRL's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, SDRL's net profit margin of 251.26% significantly outperformed against the industry.
- SEADRILL LTD reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, SEADRILL LTD increased its bottom line by earning $5.47 versus $2.32 in the prior year. For the next year, the market is expecting a contraction of 45.1% in earnings ($3.00 versus $5.47).
- You can view the full analysis from the report here: SDRL Ratings Report