Today's Pre-Market Laggard Is Seadrill (SDRL)

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 $290.2 million.
  • SDRL traded 73,699 shares today in the pre-market hours as of 7:43 AM.
  • SDRL is down 3% 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 28.7%. SDRL has a PE ratio of 2.5. Currently there are 2 analysts that rate Seadrill a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for Seadrill has been 11.2 million shares per day over the past 30 days. Seadrill has a market cap of $6.6 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.27 and a short float of 8.6% with 1.23 days to cover. Shares are down 67.6% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Seadrill as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, generally higher debt management risk and weak operating cash flow.

Highlights from the ratings report include:
  • SDRL's revenue growth trails the industry average of 16.4%. Since the same quarter one year prior, revenues slightly increased by 1.0%. 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.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. 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 55.61%. Regardless of SDRL's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 11.52% trails the industry average.
  • The debt-to-equity ratio of 1.33 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, SDRL maintains a poor quick ratio of 0.84, which illustrates the inability to avoid short-term cash problems.
  • Net operating cash flow has decreased to $397.00 million or 25.51% 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.

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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