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Rowan Companies: 4Q17 Analyst Estimates and Recommendations

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Overview

In the previous parts of this series, we looked at analyst recommendations for Diamond Offshore Drilling, Ensco, Transocean, and Noble Corporation. In this part, we’ll look at analyst recommendations and earnings estimates for Rowan Companies (RDC) in 4Q17.

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Consensus rating

According to Reuters, the consensus rating for Rowan Companies is 2.7, which means a “hold.” The following are the consensus ratings for other offshore drilling stocks (IYE) on a scale of 1 (strong buy) to 5 (strong sell):

  • Noble Corporation (NE): 3.2, or a “hold”
  • Diamond Offshore Drilling (DO): 3.5, or a “hold”
  • Transocean (RIG): 2.7, or a “hold”

Analyst recommendations

Of the 33 analysts covering Rowan Companies (RDC), 30% recommend a “buy” or some equivalent for the stock, while 61% recommend a “hold.” Among the top offshore drilling stocks (IYE), Rowan Companies has the highest percentage of “hold” recommendations. The remaining 9% recommend a “sell.”

RDC’s consensus 12-month target price of $15.50 implies a downside of 0.38%, based on its current market price of $15.60 on January 25, 2018.

Analyst estimates

Analysts are estimating a fall in Rowan Companies’ 4Q17 revenues to $265 million, from $291 million in the previous quarter and $351 million in 4Q16. That represents an 8.9% fall quarter-over-quarter and a 25% fall year-over-year.

Rowan Companies’ 2017 revenue estimate stands at $1.3 billion, which is 32% lower year-over-year. Analysts expect 2018 revenue to be $882 million. Along with a fall in revenue, analysts estimate a fall in EBITDA (earnings before interest, tax, depreciation, and amortization). The estimated 4Q17 EBITDA for RDC is $86 million, which is 8.5% lower than the previous quarter and 39% lower year-over-year.

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