DO Intrinsic Value Calculation – Diamond Offshore Drilling Reports Earnings Results for Q2 FY2023
August 28, 2023
☀️Earnings Overview
For the second quarter of FY2023, DIAMOND OFFSHORE DRILLING ($NYSE:DO) reported a total revenue of USD 281.6 million, a 36.9% increase from the same quarter of the prior year. Net income for the quarter was USD 238.8 million, a reversal from the previous year’s loss of -21.9 million.
Stock Price
On Tuesday, Diamond Offshore Drilling reported their earnings results for the second quarter of FY2023. At the start of the day, the stock opened at $14.6 and closed at $14.8, signifying a slight decrease of 1.9% from the previous closing price of $15.1. The company’s financial performance during this period was somewhat mixed, as it was able to record an increase in revenue from the same period last year, but had a decline in net income compared to the same period last year. The company attributed this decline to higher costs and expenses for operations, as well as a decrease in drilling activity levels.
This was mainly due to the company’s continued focus on efficiency and cost reduction initiatives, as well as strong performance from its international operations. Despite a decline in net income, the company was able to increase its revenue and experience increased demand for its services. Live Quote…
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for DO. More…
| Total Revenues | Net Income | Net Margin |
| 962.92 | 199.08 | 20.8% |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for DO. More…
| Operations | Investing | Financing |
| 30.41 | -84.43 | 40.37 |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for DO. More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 1.79k | 854.84 | 6.82 |
Key Ratios Snapshot
Some of the financial key ratios for DO are shown below. More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| – | – | -2.1% |
| FCF Margin | ROE | ROA |
| -5.8% | -1.8% | -0.7% |
Analysis – DO Intrinsic Value Calculation
At GoodWhale, we recently conducted an analysis to examine the wellbeing of DIAMOND OFFSHORE DRILLING. Our proprietary Valuation Line estimates the fair value of DIAMOND OFFSHORE DRILLING share to be around $7.5. However, the company’s stock is currently trading at $14.8, which is a 96.6% overvaluation. This indicates that investors may not be fully aware of the company’s current situation and there is a high risk of a potential stock price correction. More…
Peers
The offshore drilling industry is a highly competitive market, with many different companies vying for contracts and resources. Diamond Offshore Drilling Inc is one of the major players in this industry, alongside its competitors Seadrill Ltd, Vantage Drilling Co, and Awilco Drilling PLC. All of these companies are striving to provide the best services possible and secure lucrative contracts, with each looking to gain an advantage over the others through superior expertise, technology, and cost efficiency.
– Seadrill Ltd ($NYSE:SDRL)
Seadrill Ltd. is an international offshore drilling company that provides offshore drilling services to the oil and gas industry. The company has a market cap of 1.86B as of 2023 and a Return on Equity of -263.62%. This market capitalization reflects the overall financial health of the company, as it is a measure of the total market value of all of its outstanding shares. The Return on Equity is a measure of how efficiently the company is utilizing its resources, and the negative value indicates that the company is struggling to generate profits from its operations. Seadrill Ltd. has been in business for over a decade and continues to provide quality services to the industry.
– Vantage Drilling Co ($OTCPK:VTGDF)
Vantage Drilling Company is an offshore drilling contractor that provides contract drilling services to oil and gas companies. Its fleet consists of seven ultra-deepwater drillships and seven jackup rigs. The company has a market cap of $1.31 billion as of 2023, which indicates that its shares are trading at a premium in the public markets. Its Return on Equity (ROE) of -16.11% indicates that it is not creating value for the shareholders. This could be attributed to the company’s declining revenues during the past few years due to a slowdown in global oil demand.
– Awilco Drilling PLC ($LTS:0Q2K)
Wilco Drilling PLC is a publicly traded offshore drilling company based in Norway. It specializes in providing drilling services for oil and gas exploration in the North Sea and other international locations. As of 2023, Wilco Drilling PLC has a market capitalization of 215.83M, representing the total value of its outstanding shares. Additionally, it has a Return on Equity (ROE) of -2683.9%. This indicates that the company has not been able to generate profit for its shareholders, as the negative figure suggests that it has incurred losses.
Summary
DIAMOND OFFSHORE DRILLING reported strong financial results for the second quarter of FY2023, with total revenue increasing 36.9% from the same period in the previous year. Net income for the quarter was USD 238.8 million, compared to a loss of -21.9 million in the year prior. This is a great sign for investors looking to invest in this company, as it indicates company growth and stability.
The strong earnings also suggest that DIAMOND OFFSHORE DRILLING is well positioned to continue growing and continue generating profits. For investors, this means that DIAMOND OFFSHORE DRILLING could be a good option for long-term investments.
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