Seadrill (SDRL) Down In Pre-Market Trading

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Seadrill ( SDRL) as a pre-market laggard candidate. In addition to specific proprietary factors, Trade-Ideas identified Seadrill as such a stock due to the following factors:

  • SDRL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $155.4 million.
  • SDRL traded 39,755 shares today in the pre-market hours as of 7:27 AM.
  • SDRL is down 2.9% today from yesterday's close.

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More details on SDRL:

Seadrill Limited, an offshore drilling contractor, provides offshore drilling services to the oil and gas industry worldwide. The company operates in three segments: Floaters, Jack-up Rigs, and Tender Rigs. The stock currently has a dividend yield of 10.7%. SDRL has a PE ratio of 6.8. Currently there are 3 analysts that rate Seadrill a buy, 1 analyst rates it a sell, and 4 rate it a hold.

The average volume for Seadrill has been 4.0 million shares per day over the past 30 days. Seadrill has a market cap of $17.5 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.43 and a short float of 7.6% with 6.62 days to cover. Shares are down 9.8% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Seadrill as a buy. The company's strengths can be seen in multiple areas, such as its notable return on equity and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • 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.
  • The gross profit margin for SEADRILL LTD is rather high; currently it is at 58.59%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 49.59% significantly outperformed against the industry average.
  • SDRL, with its decline in revenue, underperformed when compared the industry average of 20.4%. Since the same quarter one year prior, revenues slightly dropped by 3.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • SEADRILL LTD has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings 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 44.6% in earnings ($3.03 versus $5.47).
  • The share price of SEADRILL LTD has not done very well: it is down 18.82% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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