Diamond Offshore Drilling (DO): Today's Weak On High Volume Stock

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.

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 $57.5 million.
  • DO has traded 273,203 shares today.
  • DO is trading at 4.20 times the normal volume for the stock at this time of day.
  • DO is trading at a new low 3.02% 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.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in DO with the Ticky from Trade-Ideas. See the FREE profile for DO NOW at Trade-Ideas

More details on DO:

Diamond Offshore Drilling, Inc. provides contract drilling services to the energy industry worldwide. The company provides services in floater market, such as ultra-deepwater, deepwater, and mid-water; and non-floater or jack-up market. The stock currently has a dividend yield of 1.5%. DO has a PE ratio of 11.9. Currently there are no analysts that rate Diamond Offshore Drilling a buy, 7 analysts rate it a sell, and 7 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 $4.6 billion and is part of the basic materials sector and energy industry. The stock has a beta of 0.99 and a short float of 22.5% with 8.85 days to cover. Shares are down 8.8% year-to-date as of the close of trading on Friday.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

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 increase in net income, reasonable valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, a generally disappointing performance in the stock itself and feeble growth in the company's earnings per share.

Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Energy Equipment & Services industry. The net income increased by 6.7% when compared to the same quarter one year prior, going from $92.62 million to $98.84 million.
  • The current debt-to-equity ratio, 0.50, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.83 is somewhat weak and could be cause for future problems.
  • DO'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 38.72%, 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, 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.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

More from Markets

GE Beats Earnings Estimates and 4 Other Stories You Must Know Friday Morning

GE Beats Earnings Estimates and 4 Other Stories You Must Know Friday Morning

General Electric, Honeywell, Wells Fargo and Qualcomm - 5 Things You Must Know

General Electric, Honeywell, Wells Fargo and Qualcomm - 5 Things You Must Know

Oil Slips From Three-Year Peak After Trump Tweets Anger at OPEC

Oil Slips From Three-Year Peak After Trump Tweets Anger at OPEC

Global Stocks Hit by Asia Tech Weakness, Oil Price Rally; U.S. Futures Slip

Global Stocks Hit by Asia Tech Weakness, Oil Price Rally; U.S. Futures Slip

Ericsson Rockets After Solid Q1 Following Cevian Push to Accelerate Turnaround

Ericsson Rockets After Solid Q1 Following Cevian Push to Accelerate Turnaround