Financial Survey: Parker Drilling (PKD) & Seadrill (SDRL)

Parker Drilling (NYSE: PKD) and Seadrill (NASDAQ:SDRL) are both small-cap oils/energy companies, but which is the better business? We will contrast the two businesses based on the strength of their institutional ownership, valuation, dividends, earnings, analyst recommendations, profitability and risk.

Institutional and Insider Ownership

65.3% of Parker Drilling shares are owned by institutional investors. 3.6% of Parker Drilling shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Earnings & Valuation

This table compares Parker Drilling and Seadrill’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Parker Drilling $427.00 million 0.38 -$230.81 million ($1.08) -1.09
Seadrill N/A N/A N/A ($1.16) -0.33

Seadrill has higher revenue, but lower earnings than Parker Drilling. Parker Drilling is trading at a lower price-to-earnings ratio than Seadrill, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of recent ratings for Parker Drilling and Seadrill, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Parker Drilling 0 2 1 0 2.33
Seadrill 1 0 0 0 1.00

Profitability

This table compares Parker Drilling and Seadrill’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Parker Drilling -33.06% -38.07% -11.82%
Seadrill -27.38% -6.03% -3.02%

Volatility and Risk

Parker Drilling has a beta of 1.54, meaning that its stock price is 54% more volatile than the S&P 500. Comparatively, Seadrill has a beta of 2.94, meaning that its stock price is 194% more volatile than the S&P 500.

Summary

Parker Drilling beats Seadrill on 6 of the 10 factors compared between the two stocks.

About Parker Drilling

Parker Drilling Company (Parker Drilling) is a provider of contract drilling, and drilling-related services and rental tools and services. The Company’s business consists of two business lines: drilling services and rental tools services. Its Rental Tools Services business includes U.S. Rental Tools and International Rental Tools segments, and its Drilling Services business includes its U.S. (Lower 48) Drilling, and International & Alaska Drilling segments. In its Drilling Services business, the Company drills oil and gas wells for customers in both the United States and international markets. In its Rental Tools Services business, the Company provides rental equipment and services to exploration and production (E&P) companies, drilling contractors and service companies on land and offshore in the United States and select international markets. As of December 31, 2016, the Company had operations in 20 countries.

About Seadrill

Seadrill Limited is an offshore drilling contractor providing offshore drilling services to the oil and gas industry. The Company’s primary business is the ownership and operation of drillships, semi-submersible rigs and jack-up rigs for operations in shallow-, mid-, deep-, and ultra deepwater areas, and in benign and harsh environments. The Company’s segments are Floaters and Jack-ups. The Company offers services encompassing drilling, completion and maintenance of offshore exploration and production wells. The Company contracts its drilling units primarily on a dayrate basis to drill wells for its customers. The Company has a fleet of approximately 38 offshore drilling units consisting of over 12 semi-submersible rigs, approximately seven drillships and over 19 jack-up rigs in operation, and contracts for the construction of approximately 13 offshore drilling units. The Company also provides management services to certain unconsolidated companies in which its holds investments.

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