Diamond Offshore Drilling (DO) versus Halliburton (HAL) Financial Contrast

Halliburton (NYSE: HAL) and Diamond Offshore Drilling (NYSE:DO) are both oils/energy companies, but which is the better stock? We will contrast the two businesses based on the strength of their risk, analyst recommendations, profitability, institutional ownership, earnings, valuation and dividends.

Analyst Recommendations

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This is a summary of current ratings and recommmendations for Halliburton and Diamond Offshore Drilling, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Halliburton 0 4 19 0 2.83
Diamond Offshore Drilling 10 8 1 0 1.53

Halliburton presently has a consensus target price of $58.70, suggesting a potential upside of 25.97%. Diamond Offshore Drilling has a consensus target price of $13.30, suggesting a potential downside of 14.52%. Given Halliburton’s stronger consensus rating and higher possible upside, equities research analysts clearly believe Halliburton is more favorable than Diamond Offshore Drilling.

Institutional & Insider Ownership

80.3% of Halliburton shares are owned by institutional investors. 0.5% of Halliburton shares are owned by insiders. Comparatively, 0.0% of Diamond Offshore Drilling shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Risk & Volatility

Halliburton has a beta of 1.06, indicating that its share price is 6% more volatile than the S&P 500. Comparatively, Diamond Offshore Drilling has a beta of 1.2, indicating that its share price is 20% more volatile than the S&P 500.

Earnings & Valuation

This table compares Halliburton and Diamond Offshore Drilling’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Halliburton $20.62 billion 1.98 -$463.00 million $1.22 38.20
Diamond Offshore Drilling $1.49 billion 1.44 $18.34 million $0.82 18.98

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

Profitability

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

Net Margins Return on Equity Return on Assets
Halliburton -2.25% 11.95% 4.20%
Diamond Offshore Drilling 1.23% 2.96% 1.80%

Dividends

Halliburton pays an annual dividend of $0.72 per share and has a dividend yield of 1.5%. Diamond Offshore Drilling does not pay a dividend. Halliburton pays out 59.0% of its earnings in the form of a dividend.

Summary

Halliburton beats Diamond Offshore Drilling on 12 of the 16 factors compared between the two stocks.

About Halliburton

Halliburton Company provides a range of services and products to oil and natural gas companies worldwide. The company's Completion and Production segment offers production enhancement services, including stimulation and sand control services; and cementing services, such as bonding the well, well casing, and casing equipment. It also provides completion tools that offer downhole solutions and services, including well completion products and services, intelligent well completions, liner hanger systems, sand control systems, and service tools; production solutions comprising coiled tubing, hydraulic workover units, and downhole tools; and pipeline and process services, such as pre-commissioning, commissioning, maintenance, and decommissioning. In addition, this segment offers oilfield production and completion chemicals and services; and electrical submersible pumps and progressive cavity pumps, as well as artificial lift services to enhance reservoir and wellbore recovery. The company's Drilling and Evaluation segment provides drilling fluid systems, performance additives, completion fluids, solids control, specialized testing equipment, and waste management services; and drilling systems and services. It also offers wireline and perforating services, including open-hole logging, and cased-hole and slickline; and drill bits and services comprising roller cone rock bits, fixed cutter bits, hole enlargement, and related downhole tools and services, as well as coring equipment and services. In addition, this segment provides integrated exploration, drilling, and production software, as well as related professional and data management services; testing and subsea services, such as acquisition and analysis of reservoir information and optimization solutions; and project management, consulting, integrated asset management, and well control and prevention services. Halliburton Company was founded in 1919 and is based in Houston, Texas.

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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