Critical Review: McDermott International (MDR) vs. The Competition

McDermott International (NYSE: MDR) is one of 56 publicly-traded companies in the “Oil Related Services and Equipment” industry, but how does it contrast to its competitors? We will compare McDermott International to similar companies based on the strength of its institutional ownership, risk, valuation, profitability, analyst recommendations, dividends and earnings.

Insider and Institutional Ownership

87.5% of McDermott International shares are owned by institutional investors. Comparatively, 65.8% of shares of all “Oil Related Services and Equipment” companies are owned by institutional investors. 1.3% of McDermott International shares are owned by insiders. Comparatively, 11.9% of shares of all “Oil Related Services and Equipment” companies are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current ratings for McDermott International and its competitors, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
McDermott International 0 4 4 0 2.50
McDermott International Competitors 500 2211 2924 125 2.46

McDermott International presently has a consensus price target of $8.26, indicating a potential upside of 25.30%. As a group, “Oil Related Services and Equipment” companies have a potential upside of 30.74%. Given McDermott International’s competitors higher possible upside, analysts clearly believe McDermott International has less favorable growth aspects than its competitors.

Earnings & Valuation

This table compares McDermott International and its competitors revenue, earnings per share and valuation.

Gross Revenue EBITDA Price/Earnings Ratio
McDermott International $2.51 billion $304.29 million 24.41
McDermott International Competitors $2.02 billion $270.48 million -38.38

McDermott International has higher revenue and earnings than its competitors. McDermott International is trading at a higher price-to-earnings ratio than its competitors, indicating that it is currently more expensive than other companies in its industry.

Volatility and Risk

McDermott International has a beta of 1.4, indicating that its share price is 40% more volatile than the S&P 500. Comparatively, McDermott International’s competitors have a beta of 1.57, indicating that their average share price is 57% more volatile than the S&P 500.

Profitability

This table compares McDermott International and its competitors’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
McDermott International 2.95% 5.55% 2.78%
McDermott International Competitors -17.69% -17.30% -5.54%

Summary

McDermott International beats its competitors on 8 of the 13 factors compared.

About McDermott International

McDermott International, Inc. is a provider of integrated engineering, procurement, construction and installation (EPCI), front-end engineering and design (FEED) and module fabrication services for upstream field developments across the world. The Company delivers fixed and floating production facilities, pipeline installations and subsea systems from concept to commissioning for offshore and subsea oil and gas projects. It operates through three segments: the Americas, Europe and Africa (AEA), the Middle East (MEA) and Asia (ASA). As of December 31, 2016, operated in approximately 20 countries across the Americas, Europe, Africa, the Middle East, Asia and Australia, its integrated resources include a diversified fleet of marine vessels, fabrication facilities and engineering offices. It support its activities with project management and procurement services, while utilizing its fully integrated capabilities in both shallow water and deepwater construction.

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