Why Seadrill (SDRL) Is Down Today

NEW YORK (TheStreet) -- Seadrill (SDRL) had its biggest decline in two and a half years on Tuesday after the offshore drilling company postponed plans to increase its dividend. The company also cautioned that rig market growth would likely slow more than expected as oil companies reduce spending.

The market for drilling rigs "may show slower growth" than previously expected in the next two years, the London-based company said in its quarterly report Tuesday. "In the current market, the board sees limited value in increasing the current quarterly distribution" greater than the 98 cents it announced for the fourth quarter, according to Bloomberg. That figure marks an increase from 95 cents in the third quarter.

The stock fell as much as 7.8%, the most since Aug. 8, 2011. The London-based company was dropping 5.65% to $35.55 at 11:31 a.m. EST on Tuesday.

The company's fourth-quarter EBIDTA was $768 million, which was in line with analysts' estimates. Seadrill expects its EBIDTA to remain flat or decline in the first quarter because of operational challenges.

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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 some important positives, 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 robust revenue growth, notable return on equity, compelling growth in net income, good cash flow from operations 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."

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