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Inside Rowan Companies’ 4Q17 Earnings Estimate

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Nov. 20 2020, Updated 1:17 p.m. ET

RDC’s EBITDA estimates

Along with the quarterly fall in 4Q17 revenues, analysts expect a fall in Rowan Companies’ (RDC) EBITDA (earnings before interest, tax, depreciation, and amortization).

Analysts estimate that RDC’s EBITDA in 4Q17 will be $88.3 million, lower than 3Q17’s $96.4 million and lower than 4Q16’s $142.9 million.

For 1Q18, the company’s estimated EBITDA stands at $56.9 million. The analyst consensus estimate for RDC’s EBITDA in fiscal 2017 is ~$493 million, 40.8% lower than its EBITDA of ~$834 million in 2016. The estimated 2018 EBITDA stands at $161 million. Such falls in EBITDA have been common among offshore drillers (IYE) in the current downturn.

Based on 3Q17’s EBITDA and revenue, RDC’s EBITDA margin was 34%. Analysts expect the company’s profit margin to fall to 32.7% in 4Q17. In 2016, the company’s EBITDA margin was 52.3%. Below are the EBITDA margins for RDC’s peers based on their 2016 EBITDAs and revenues.

  • Noble’s (NE) EBITDA margin is 39%.
  • Diamond Offshore’s (DO) EBITDA margin is 41.7%.
  • Transocean’s (RIG) EBITDA margin is 41.2%.
  • Seadrill’s (SDRL) EBITDA margin is 55.9%.
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EPS estimate

Analysts estimate RDC’s EPS (earnings per share) in the fourth quarter at -$0.30 per share. This estimate is lower than the previous quarter’s EPS of -$0.16 per share.

In 1Q18, analysts expect a further fall in RDC’s EPS to -$0.50. For 2017, the EPS estimate is -$0.63, compared with RDC’s EPS of $2.11 in 2016.

In the next and final part of this series, we’ll see what analysts recommend for Rowan Companies stock.

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