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

Analyst Ratings

This is a breakdown of recent ratings for Seadrill and Diamond Offshore Drilling, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Seadrill 1 0 0 0 1.00
Diamond Offshore Drilling 7 11 3 0 1.81

Diamond Offshore Drilling has a consensus price target of $14.37, suggesting a potential upside of 0.44%. Given Diamond Offshore Drilling’s stronger consensus rating and higher probable upside, analysts clearly believe Diamond Offshore Drilling is more favorable than Seadrill.

Valuation and Earnings

This table compares Seadrill and Diamond Offshore Drilling’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Seadrill $2.37 billion 0.08 $1.15 billion N/A N/A
Diamond Offshore Drilling $1.48 billion 1.33 $660.47 million $1.24 11.54

Seadrill has higher revenue and earnings than Diamond Offshore Drilling.

Profitability

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

Net Margins Return on Equity Return on Assets
Seadrill -27.38% -6.03% -3.02%
Diamond Offshore Drilling 11.19% 5.77% 3.42%

Summary

Diamond Offshore Drilling beats Seadrill on 7 of the 9 factors compared between the two stocks.

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.

About Diamond Offshore Drilling

Diamond Offshore Drilling, Inc. provides contract drilling services to the energy industry. As of December 31, 2016, the Company had a fleet of 24 offshore drilling rigs. As of December 31, 2016, its fleet consisted of four drillships, 19 semisubmersible rigs and one jack-up rig. Its fleet enables it to offer a range of services, primarily in the floater market, including ultra-deepwater, deepwater and mid-water. The principal markets for its offshore contract drilling services are the Gulf of Mexico, including the United States and Mexico; South America, principally offshore Brazil, and Trinidad and Tobago; Australia and Southeast Asia, including Malaysia, Indonesia and Vietnam; Europe, principally offshore the United Kingdom and Norway; East and West Africa; the Mediterranean, and the Middle East. The Company provides offshore drilling services to a customer base that includes independent oil and gas companies, and government-owned oil companies.

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