Diamond Offshore Drilling (DO) Is Weak On High Volume Today

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 Diamond Offshore Drilling ( DO) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Diamond Offshore Drilling as such a stock due to the following factors:

  • DO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $44.7 million.
  • DO has traded 298,070 shares today.
  • DO is trading at 4.49 times the normal volume for the stock at this time of day.
  • DO is trading at a new low 7.02% below yesterday's close.

'Weak on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as material stock news, analyst downgrades, insider selling, selling from 'superinvestors,' or that hedge funds and traders are piling out of a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize (or avoid losses by trimming weak positions). In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on DO:

Diamond Offshore Drilling, Inc. provides contract drilling services to the energy industry world wide. The company provides drilling services in ultra-deepwater, deepwater, and mid-water; and non-floater or jack-up markets. The stock currently has a dividend yield of 1.4%. DO has a PE ratio of 13.3. Currently there are no analysts that rate Diamond Offshore Drilling a buy, 6 analysts rate it a sell, and 10 rate it a hold.

The average volume for Diamond Offshore Drilling has been 2.0 million shares per day over the past 30 days. has a market cap of $5.0 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 21.3% with 10.75 days to cover. Shares are down 36.5% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Diamond Offshore Drilling as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels 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.

Highlights from the ratings report include:
  • DO's revenue growth trails the industry average of 16.0%. Since the same quarter one year prior, revenues slightly increased by 4.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Despite currently having a low debt-to-equity ratio of 0.50, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that DO's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.82 is high and demonstrates strong liquidity.
  • 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, DIAMOND OFFSHRE DRILLING INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • Net operating cash flow has declined marginally to $315.51 million or 6.59% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.

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