Pacific Drilling (PACDQ) versus Parker Drilling (NYSE:PKD) Critical Analysis

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

Risk and Volatility

Parker Drilling has a beta of 1.51, meaning that its stock price is 51% more volatile than the S&P 500. Comparatively, Pacific Drilling has a beta of 3.21, meaning that its stock price is 221% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Parker Drilling and Pacific Drilling, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Parker Drilling 0 2 1 0 2.33
Pacific Drilling 0 0 0 0 N/A

Institutional & Insider Ownership

63.5% of Parker Drilling shares are held by institutional investors. Comparatively, 0.4% of Pacific Drilling shares are held by institutional investors. 3.6% of Parker Drilling shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares Parker Drilling and Pacific Drilling’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%
Pacific Drilling -101.35% -17.63% -7.68%

Earnings & Valuation

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Parker Drilling $427.00 million 0.30 -$230.81 million ($1.08) -0.86
Pacific Drilling $769.47 million 0.02 -$37.15 million ($20.58) -0.03

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

Summary

Parker Drilling beats Pacific Drilling on 6 of the 11 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 Pacific Drilling

Pacific Drilling S.A. is an international offshore drilling contractor. The Company provides offshore drilling services to the oil and natural gas industry through the use of high-specification rigs. The Company’s primary business is to contract its high-specification rigs, related equipment and work crews, primarily on a day rate basis, to drill wells for its clients. The Company is engaged in drillships segment. The Company focuses on the high-specification segment of the floating rig market. The Company considers high-specification requirements to include rigs in water depths of approximately 7,500 feet or projects requiring advanced operating capabilities, such as hook-loads (>800 tons), accommodations (over 200 beds), mud storage and pumping capacity, and deck-load and space capabilities. The Company’s contract drillships operate in the deepwater regions of the United States, Gulf of Mexico and Nigeria.

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