Diamond Offshore Drilling: Best Offshore Drilling Stock in 2017


Dec. 18 2017, Updated 7:35 a.m. ET

YTD performance

Diamond Offshore Drilling’s (DO) YTD (year-to-date) returns were -3.5% as of December 12, 2017. Since December 30, 2016, the Energy Select Sector SPDR ETF (XLE) has fallen 8%. The VanEck Vectors Oil Services ETF (OIH) has YTD returns of -25.7%. The Dow Jones Industrial Average (DJIA-INDEX) has risen 23% YTD as of December 12, 2017. The SPDR S&P 500 ETF (SPY) has risen 18.7% for the same period.

Diamond Offshore Drilling significantly outperformed the OFS (oilfield services) industry ETF and the broader energy industry ETFs, but it underperformed the broad equity market indexes.

Although Diamond Offshore Drilling has a negative year-to-date return, its last six-month performance has been excellent, with the stock rising 49.9%.

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Performance in 9M17

In the first nine months of 2017, Diamond Offshore Drilling had revenue of $1.1 billion, which was 2.3% lower than the same period last year. Its backlog in October 2017 was $2.6 billion compared to $3.5 billion at the start of 2017 and $4.1 billion a year ago in October 2016. It recorded net income of $50 million for the first nine months of 2017 compared to a net loss of $488 million in the same period in 2016. The company took proactive measures to enhance its liquidity position during the year. Its cash balance as of September 30, 2017, was $276 million compared to $156 million at the start of the year. It also had a positive free cash flow in that period. To know more about the company’s results for the quarter ended September 30, 2017, be sure to read Market Realist’s series Drilling into Diamond Offshore’s 3Q17 Results.

In the rest of this series, we’ll look at the stock performances of the other top offshore drilling stocks, including Transocean (RIG), Rowan Companies (RDC), Noble Corporation (NE), and Ensco (ESV).


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