How Will Seadrill (SDRL) Stock Respond to Earnings Miss?

Seadrill (SDRL) reported lower than expected financial results for the 2015 third quarter.
By Amanda Gomez ,

NEW YORK (TheStreet) -- Before the market open this morning, Seadrill (SDRL) - Get Report reported disappointing 2015 third quarter financial results.

The offshore drilling contractor reported earnings of 21 cents per share on revenue of $985 million for the quarter ended September 30.

Analysts had estimated earnings of 45 cents per share on $1.02 billion in revenue for the latest quarter.

By the end of the quarter, 43 of Seadrill's 54 rigs were operating after the company maintained some rigs idle to save costs amid the volatile oil market.

The company increased its 2015 goal for total savings to $600 million from $500 million and expects to save an additional $200 million next year.

"We believe that market conditions are likely to remain challenging through 2016," CEO Per Wullf said in a statement.

"The longer this downturn lasts, the more robust the recovery will be when it happens," he added. "Seadrill is in a position to capitalize on the upturn."

Seadrill stock is gaining 2.45% to $6.49 this afternoon as oil prices rally on increased tensions in the Middle East and a weaker U.S. dollar, according to Reuters.

WTI crude is up 2.68% to $42.87 per barrel, while Brent crude is rising 2.94% to $46.15 per barrel, according to the CNBC.com index.

Separately, TheStreet Ratings team rates SEADRILL LTD as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

We rate SEADRILL LTD (SDRL) 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 attractive valuation levels, expanding profit margins and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, disappointing return on equity and a generally disappointing performance in the stock itself.

You can view the full analysis from the report here: SDRL

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Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.

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