It has been about a month since the last earnings report for Rowan (RDC). Shares have lost about 2.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Rowan due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Rowan Companies Loss in Q4 Wider Than Expected
Rowan Companies plc’s adjusted fourth-quarter 2018 loss from continuing operations of $1.11 per share was wider than the Zacks Consensus Estimate of loss of $1.07 due to increased expenses. Moreover, the quarterly loss was wider than the year-ago adjusted figure of 29 cents.
On the flip side, total revenues of $179.4 million in the fourth quarter beat the Zacks Consensus Estimate of $169.8 million, which can be attributed to Rowan Norway and Rowan Stavanger’s recommencing of operations, along with leasing the EXL I and EXL IV to ARO Drilling. However, the top line was down from $296.7 million in the prior-year quarter due to the divestment of Yeargain and Boswell rigs to ARO Drilling and fall in average dayrates.
Dayrates and Utilization
The company's deepwater rigs recorded an average dayrate of $138,100, down from $767,100 in the year-ago quarter. Moreover, jackup rigs saw a dayrate of $84,200, down from $123,300 in the prior-year quarter.
The overall dayrate of all the rigs was $90,200 compared with $174,500 in fourth-quarter 2017. Average utilization of the company's rigs was 83% compared with 70% in the comparable quarter last year.
Total revenue-producing rig days increased 2.3% year over year to 1,609 in the fourth quarter of 2018.
Total Expenses
In the fourth quarter, the company reported $230.2 million in total costs, much higher than $151.9 million in the year-ago period. However, direct operating expenses fell from $176.2 million in the prior-year quarter to $166.7 million.
Financials
Capital expenditure in fourth-quarter 2018 was $52.3 million compared with $22 million in the prior-year period.
As of Dec 31, 2018, the company's cash balance was $1,026.7 million and long-term debt amounted to $2,309.7 million. The long-term debt-to-capitalization ratio of the company was 31.4%.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month.
VGM Scores
At this time, Rowan has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Rowan has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Rowan Companies PLC (RDC): Free Stock Analysis Report
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