DO  Diamond Offshore Drilling Inc.

Exchange

NYSE

Sector

Energy

Industry

Oil & Gas Production

Market Cap.

2.30B

Vuru Grade

46.50/100

Current Price

$16.73
-0.58 (-3.35%)

Growth Price

$44.04
Undervalued by 163.21%

Company Metrics

  • P/E 13.6
  • P/S 1.6
  • P/B 0.63
  • EPS 1.23
  • Cash ROIC -1.68%
  • Cash Ratio 1.68
  • Dividend 0 / 0%
  • Avg. Vol. 2.88M
  • Shares 137.48M
  • Market Cap. 2.30B

Company Description

Diamond Offshore Drilling, Inc. operates as an offshore oil and gas drilling contractor worldwide. The company provides offshore drilling services in the deepwater, harsh environment, conventional semisubmersible, and jack-up markets to independent oil and gas companies and government-owned oil companies. As of December 31, 2009, it operated a fleet of 47 offshore rigs consisting of 32 semisubmers... more


Download 10 Years of Financial Statements:
Income Statement   Balance Sheet   Cash Flow

News

There is no news available at this time.
Growth Rate Assumed by Market

We did a reverse valuation to calculate the growth rate the market is assuming for DO to be considered fairly valued at its current market price. It's useful to compare this to the growth rate we're assuming for the Growth Price.

Future Free Cash Flow Growth Rate

This is the annual growth rate we've applied to calculate DO's Free Cash Flow for the next 10 years. To calculate it, we looked at several time periods of the last 10 years. Feel free to adjust it, but we limit the initial growth rate to 20% and slow it down over the years. Otherwise, long-term sustainability issues come into play.

Discount Rate

The discount rate is the annual rate of return an investor requires to take the risk of investing in a single stock. To account for that risk, this should be above 8-10%, as this is the avg. annual rate of return for the S&P500 over the past 100 years.

$16.73 Current Price

$44.04 Growth Price (DCF)

Undervalued by 163.21%


Growth Rate Assumed by Market: -500.00%


Future Free Cash Flow Growth Rate: 0.0%


Discount Rate: 15.0%


Show Free Cash Flow numbers

$49.47 Book Price

Undervalued by 195.72%


Very Poor Cash Return on Invested Capital over the past 5 years

DO has failed to generate positive returns on its investments in buildings, projects and equipment. This could be due to poor management, lack of an economic moat or the capital intensive nature of the business.

DO has lost $1.68 of cash for every $100 invested.
Figures in USD. Fiscal year ends in December
20132014201520162017
Free Cash Flow 108.39M -1.04B -94.23M -6.12M 354.23M
divided by
Invested Capital 5.55B 6.91B 6.41B 5.88B 5.65B
Cash ROIC 1.95% -15.04% -1.47% -0.10% 6.27%

Poor Return on Equity over the past 5 years

DO has shown an inability to deliver strong results for shareholders. This could be due to poor management, DO operating in a highly competitive industry, or having a weak business in general.

DO has only generated $0.88 of Earnings for every $100 of Shareholders' Equity.
Figures in USD. Fiscal year ends in December
20132014201520162017
Net Income 548.69M 387.01M -274.29M -372.50M 18.35M
divided by
Stockholders' Equity 4.64B 4.45B 4.11B 3.75B 3.77B
Return on Equity 11.83% 8.69% -6.67% -9.93% 0.49%

Good Business Performance over the past 10 years

It's likely DO has been unable to maintain profitability in tough economic times, making it a somewhat cyclical business. The other possibility is DO has expended significant capital on items such as property, plant and equipment in specific years. Look for correlations.

DO has created positive free cash flow for 7 or 8 of the past 10 years.
Figures in USD. Fiscal year ends in December
2008200920102011201220132014201520162017
Free Cash Flow 952.83M 1.10B 848.06M 645.35M 609.23M 108.39M -1.04B -94.23M -6.12M 354.23M

Strong Balance Sheet

DO is financially strong with Current Assets covering Total Liabilities. It's in a fairly liquid position and dependent on the amount and saleability of any inventory; it may have the financial security to survive an economic downturn.
Figures in USD. Fiscal year ends in December
2008200920102011201220132014201520162017
Cash 736.64M 777.27M 1.08B 1.24B 1.49B 2.10B 249.66M 130.55M 156.27M 376.04M
Current Assets 1.47B 1.72B 1.86B 1.99B 2.13B 2.72B 899.06M 669.60M 505.81M 886.65M
Total Assets 4.94B 6.26B 6.73B 6.96B 7.24B 8.39B 8.02B 7.16B 6.37B 6.25B
Current Liabilities 509.09M 413.48M 626.29M 427.29M 485.55M 745.58M 856.65M 625.72M 340.50M 223.29M
Total Liabilities 1.59B 2.63B 2.87B 2.63B 2.66B 3.75B 3.57B 3.05B 2.62B 2.48B
Stockholder' Equity 3.35B 3.63B 3.86B 4.33B 4.58B 4.64B 4.45B 4.11B 3.75B 3.77B
Current Ratio 2.88 4.17 2.98 4.66 4.39 3.65 1.05 1.07 1.49 3.97
TL-to-TA 0.32 0.42 0.43 0.38 0.37 0.45 0.45 0.43 0.41 0.40

Low or No Reinvestment of Profits over the past 10 years

DO has either been retaining a small amount of their earnings or has done so inconsistently. A lack of consistency could be due to DO operating at a loss or them having such a strong economic moat they feel comfortable spending profits on growth. Be wary of future prospects and if applicable, inspect the moat's sustainability.
Figures in USD. Fiscal year ends in December
2008200920102011201220132014201520162017
Retained Earnings 1.62B 1.78B 2.00B 2.47B 2.70B 2.76B 2.66B 2.32B 1.95B 1.96B
Retained Earnings Growth - 9.95% 12.52% 23.68% 9.33% 2.15% -3.59% -12.88% -16.06% 0.91%

Inconsistent Net Profit Margins over the past 10 years

DO potentially has a competitive advantage, however inconsistent profit margins are a cause for concern. Look at reasons for this inconsistency to determine the likelihood of future sustainability.

$15.59 of every $100 of Revenue have been pure profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in December
2008200920102011201220132014201520162017
Net Income 1.31B 1.38B 955.46M 962.54M 720.48M 548.69M 387.01M -274.29M -372.50M 18.35M
divided by
Revenue 3.54B 3.63B 3.32B 3.32B 2.99B 2.92B 2.81B 2.42B 1.60B 1.49B
Net Profit Margin 36.99% 37.90% 28.75% 28.97% 24.12% 18.79% 13.75% -11.34% -23.28% 1.23%

Strong Pricing Power over the past 10 years

DO has maintained substantial gross margins, suggesting that they have been able to set prices without consideration of the cost of goods sold. This potentially leaves flexibility in inflationary environments to raise prices on consumers and maintain profitability.

$55.88 of every $100 worth of sales have been Gross Profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in December
2008200920102011201220132014201520162017
Gross Profit 2.29B 2.41B 1.84B 3.32B 1.40B 1.27B 1.21B 1.13B 770.11M 650.04M
divided by
Revenue 3.54B 3.63B 3.32B 3.32B 2.99B 2.92B 2.81B 2.42B 1.60B 1.49B
Gross Margin 64.70% 66.30% 55.39% 100.00% 46.89% 43.59% 43.17% 46.85% 48.12% 43.75%

High Capital Intensity over the past 10 years

DO spends large amounts of capital buying new equipment or investing in new facilities to stay competitive. Over the long term, those costs may have to be fuelled by debt. Look at the growth of Shareholders' Equity to see if this strategy is having a positive or negative impact.

220.60% of Profits are being spent on Capital Expenditures, like Property, Plant, & Equipment, required to run the business.
Figures in USD. Fiscal year ends in December
2008200920102011201220132014201520162017
Capital Expenditure 666.86M 412.44M 434.26M 774.76M 702.04M 957.60M 2.03B 830.66M 652.67M 139.58M
divided by
Net Income 1.31B 1.38B 955.46M 962.54M 720.48M 548.69M 387.01M -274.29M -372.50M 18.35M
Capital Expenditure Ratio 50.87% 29.97% 45.45% 80.49% 97.44% 174.53% 525.25% -302.84% -175.21% 760.83%

Very Strong Dividend History over the past 10 years

DO has consistently distributed a dividend for at least the past 10 years. Such a long dividend history suggests DO is very established in its market and that its dividend distribution is likely to continue for a significant period of time.
Figures in USD. Fiscal year ends in December
2008200920102011201220132014201520162017
Dividend Paid 852.15M 1.12B 733.66M 490.06M 490.25M 490.33M 486.24M 69.43M 408,000.00 156,000.00
divided by
Shares Outstanding 139.07M 139.10M 139.07M 139.04M 139.05M 139.06M 137.52M 137.16M 137.17M 137.27M
Dividend Paid Per Share 6.13 8.02 5.28 3.52 3.53 3.53 3.54 0.51 0.00 0.00
Price at Year End 47.67 87.26 61.89 54.50 67.23 56.37 38.08 20.85 17.70 14.29
Dividend Yield 12.85% 9.19% 8.52% 6.47% 5.24% 6.25% 9.28% 2.43% 0.02% 0.01%

History of Stock Buybacks over the past 10 years

DO has some history of delivering increased value for shareholders in the form of stock buybacks. These have helped improve financial metrics and increase each shareholders' relative ownership stake in the company, due to fewer shares outstanding and holding the same number of shares.
Figures in USD. Fiscal year ends in December
2008200920102011201220132014201520162017
Shares Outstanding 139.07M 139.10M 139.07M 139.04M 139.05M 139.06M 137.52M 137.16M 137.17M 137.27M
Stock Bought Back - -0.02% 0.02% 0.02% -0.01% -0.01% 1.12% 0.27% -0.01% -0.07%
Share your thoughts about DO

Sign Up or Log In to start contributing!


Discussion
Sort By:
1
Posted by tmuscat27  (on March 28, 2012)
does anyone know where I can find past ten year p/e for canadian companies to find the signature p/e
tx tm
1
Posted by tmuscat27  (on March 26, 2012)
dividend pay out is 50% which is a bit high but not outragious.they do not have a lot of debt so I think it is still good.
tm
1
Posted by VuruSupport  (on March 26, 2012)
Hey TM,

I think you're meaning to reply to mcruscetti down below? If so, click the "Reply" link below their comment and post your comment there. This way they'll be notified of your response.

Hope that helps.

Victoria
Vuru Support Team
1
Posted by mcruscetti  (on March 22, 2012)
The biggest issue for this company is that it looks like it's paid way too much in dividends in the past couple of years. It's paid $23 a share in dividends between 2008 and 2011 - a total of $3.2 billion. Whereas, they should have focused on buying new equipment. They 28% less on new equipment in this time.

Wonder if they'll be able to stay competitive