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TheStreet Open House

Why Diamond Offshore Drilling (DO) Stock Is Down Today

NEW YORK (TheStreet) -- Diamond Offshore Drilling (DO) shares are falling -5.7% to $47.13 on Thursday due to the company's weak offshore drilling prospects despite beating analysts second quarter earnings and revenue expectations 

The company reported profits of 65 cents per share, 9 cents better than analysts had anticipated, on revenue of $692 million, $8 million better than analyst estimates.

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However, the company's fleet status report, released yesterday, showed that day rates for ultra deep offshore drilling is trending down.

Analysts at Cowen  (COWN) said, "The 485k/d rate represents the step down from recent 3-year contracts in the $550-$600 range. While the rate is above initial speculation of a flat $400k/d rate and our estimate of $450k/d, we think it will be perceived negatively as it serves as a reminder that the trend in ultra-deepwater dayrates remains firmly down."

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 good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. 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."

DO ChartDO data by YCharts

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