Ocean Rig Stock Rises with Earnings Release: What’s the Secret?



Ocean Rig’s stock, revenue, and EBITDA

Ocean Rig (ORIG) released its first quarter results and had its conference call on May 20, 2016. After the call, ORIG stock rallied to $2.20 from its previous day’s close of $1.80, a 22% rise in one day.

Let’s see how the stocks of some of Ocean Rig’s offshore drilling (IYE) peers have been performing:

  • Diamond Offshore Drilling (DO): rose by 3%
  • Ensco (ESV): rose by 4%
  • Transocean (RIG): rose by 3%
  • Atwood Oceanics (ATW): rose by 3%
  • Seadrill (SDRL): rose by 1%
  • Pacific Drilling (PACD): fell by 3%

Ocean Rig’s revenue rose by 7% to $508 million in the quarter, which ended March 31, 2016. This compares to $475 million in 4Q15. The company’s cost savings initiatives boosted its EBITDA (earnings before interest, tax, depreciation, and amortization) by 14% to $343 million from last quarter’s $301 million.

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Actual revenue versus estimates

In 1Q16, Ocean Rig’s revenue beat Wall Street analyst estimates by 20%. The estimated revenue was $424 million. The actual revenue was $508 million. It also beat analysts’ EBITDA estimate of $295 million by 16%.

What you’ll find in this series

In this series, we’ll look at Ocean Rig’s 1Q16 results and conference call highlights. We’ll try to answer why Ocean Rig stock rallied so much after its first quarter results. Also, we’ll analyze the company’s current position, management’s plans for the future, and discussions between the company’s management and analysts.

In the next part of the series, we’ll look at Ocean Rig’s revenue and why it increased in 1Q16.


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