Diamond Offshore Drilling Earnings: Here’s Why Investors are Not Excited Now

Diamond Offshore Drilling Inc. (NYSE:DO) delivered a profit and beat Wall Street’s expectations, BUT came up short on beating the revenue expectation. The revenue miss is a negative sign to shareholders seeking high growth out of the company. Shares are down 4.45%.

Diamond Offshore Drilling Inc. Earnings Cheat Sheet

Results: Adjusted Earnings Per Share increased 22.02% to $1.33 in the quarter versus EPS of $1.09 in the year-earlier quarter.

Revenue: Rose 2.68% to $758 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Diamond Offshore Drilling Inc. reported adjusted EPS income of $1.33 per share. By that measure, the company beat the mean analyst estimate of $1.24. It missed the average revenue estimate of $767.42 million.

Quoting Management: “Our solid operating results for the quarter reflect our ongoing focus on cost and downtime management,” said Larry Dickerson, President and Chief Executive Officer of Diamond Offshore. “During the quarter we announced an agreement to build a new harsh environment semisubmersible that will work offshore South Australia for BP beginning in 2016,” said Dickerson. “This represents a unique opportunity to construct a rig whose initial contract should return a substantial portion of our investment. Additionally, our construction efforts include four ultra-deepwater drillships and two deepwater semis that should meaningfully contribute to earnings beginning next year based on the contracts covering the first three units.”

Key Stats (on next page)…

Revenue increased 3.87% from $729.74 million in the previous quarter. EPS increased 4.72% from $1.27 in the previous quarter.

Looking Forward: Analysts have a more positive outlook for the company’s next-quarter performance. Over the past three months, the average estimate for next quarter’s earnings has risen from a profit of $0.91 to a profit $1.01. For the current year, the average estimate has moved up from a profit of $4.56 to a profit of $4.65 over the last ninety days.

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(Company fundamentals provided by Xignite Financials. Email any earnings discrepancies to earnings [at] wallstcheatsheet.com)