BJ- Looks to me liked you picked some good company's in the drillers group. Although I was surprised how quickly they fell 3-4 months ago, I've done pretty well with these for the last couple of years. And I'm guessing that again this year, it'll likely be one of the best places to your money.
But consider this. Clearly, the recent weakness is do to falling oil prices. But what got the the ball rolling was a deceleration in quarter over quarter revenue and earnings growth. This then led to a whole bunch of downward revisions for the following quarter by the analysts. This group isn't likely to take off again until oil prices stabilize AND Q over Q growth flattens or begins up again AND analysts stop revising down the estimates.
Diamond Offshore:
Revenue growth for the last two Q's 47% to 46%
Earnings growth for the last two Q's 93% to 41% to 57%(est) next Q
Analyst Revisions: 17 estimates, 1 revised up, 8 revised down
Transocean Offshore:
Revenue growth for the last two Q's: 63% to 19%
Earnings growth for the last two Q's: 26% to 99+% to 99+%(est) next Q
Analyst Revisions: 19 estimates, 1 revised up, 10 revised down
I'd wait on both of these. Deepwater looks like the place to be at some point, but until DO can stop the fall in it's earnings growth rate, I'm going to avoid it. Analysts expect that to happen next Q, but I want to see it first. RIG's earnings have been fine, but that decline in revenue growth was extreme. I need to see that turn around.
Ensco:
Revenue growth for the last two Q's 66% to 54%
Earnings growth for the last two Q's 99+% to 99+% to 99+%(est) next Q
Analyst Revisions: 18 estimates, 8 revised up, 0 revised down
Marine Drilling:
Revenue growth for the last two Q's: 72% to 81%
Earnings growth for the last two Q's: 99+% to 99+% to 85%(est) next Q
Analyst Revisions: 15 estimates, 2 revised up, 4 revised down
I like both of these ocean drillers. To me, ESV looks better. I think that the decline in rev growth is too small to be very significant. And, most important, most analysts tend to undershoot when they revise. If that happens with ESV, we should get a good upside surprise next Q. I'm buying on weakness now. With MDCO, I'm concerned that there are more downward than upward revisions for next Q.
Parker Drilling:
Revenue growth for the last two Q's 99+% to 99+%
Earnings growth for the last two Q's 99+% to 99+% to 99+%(est) next Q
Analyst Revisions: 6 estimates, 2 revised up, 2 revised down
Trico Marine:
Revenue growth for the last two Q's: 99+% to 99+%
Earnings growth for the last two Q's: 99+% to 69% to 13%(est) next Q
Analyst Revisions: 10 estimates, 0 revised up, 6 revised down
I like PKD, sort of. It's numbers look good. My concern is that O&G prices will have a real impact quickly. Land drillers have short contracts. Rising or falling prices will show up in their earnings reports within a few Q's. I'm thinking about taking a small position now, and then a bigger one if oil shows any sign of life. I don't know anything about TMAR. Might be a great company, but it's numbers look awful.
Hope this helps,
bobster
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