The 243 floater rig count demand in second quarter 2015 fell similarly to first quarter, the firm stated.
Additionally, there have been a stacking/scrapping slowdown of rigs, which appear to be rig type and location-driven, as second quarter rig roll-offs were dominated by 5th G+ (DP) rigs, including several rigs in Brazil, analysts said.
Analysts expect the fall in demand to continue to outpace the stacking/scrapping pace near-term.
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Atwood Oceanics is an offshore drilling contractor that engages in the drilling and completion of exploratory and developmental oil and gas wells worldwide.
On Thursday, shares dropped 3.76% to $26.37.
Separately, TheStreet Ratings team rates ATWOOD OCEANICS as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate ATWOOD OCEANICS (ATW) 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 robust revenue growth, largely solid financial position with reasonable debt levels by most measures and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and a generally disappointing performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth greatly exceeded the industry average of 1.8%. Since the same quarter one year prior, revenues rose by 28.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The current debt-to-equity ratio, 0.59, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, ATW has a quick ratio of 1.93, which demonstrates the ability of the company to cover short-term liquidity needs.
- ATWOOD OCEANICS reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ATWOOD OCEANICS reported lower earnings of $5.24 versus $5.32 in the prior year. This year, the market expects an improvement in earnings ($7.25 versus $5.24).
- ATW's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 46.11%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- 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, ATWOOD OCEANICS'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: ATW Ratings Report