Rowan Companies Second Quarter Earnings Sneak Peek

S&P 500 (NYSE:SPY) component Rowan Companies, Inc. (NYSE:RDC) will unveil its latest earnings on Thursday, August 2, 2012. Rowan Companies provides international and domestic contract drilling services, as well as equipment for the drilling, mining and timber industries.

Rowan Companies, Inc. Earnings Preview Cheat Sheet

Wall St. Earnings Expectations: The average analyst estimate is for profit of 51 cents per share, a rise of 34.2% from the company’s actual earnings for the year-ago quarter. During the past three months, the average estimate has moved down from 69 cents. Between one and three months ago, the average estimate moved down. It has been unchanged at 51 cents during the last month. Analysts are projecting profit to rise by 104.5% versus last year to $2.29.

Past Earnings Performance: The company is looking to make a streak of three quarters of beating estimates. Last quarter, it beat expectations by reporting net income of 47 cents per share, and the previous quarter, it had profit of 32 cents.

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A Look Back: In the first quarter, profit rose 54.4% to $49.5 million (40 cents a share) from $32.1 million (25 cents a share) the year earlier, exceeding analyst expectations. Revenue fell 8.5% to $333.5 million from $364.3 million.

Wall St. Revenue Expectations: On average, analysts predict $340.8 million in revenue this quarter, a rise of 52.5% from the year-ago quarter. Analysts are forecasting total revenue of $1.38 billion for the year, a rise of 46.9% from last year’s revenue of $939.2 million.

Stock Price Performance: Between May 31, 2012 and July 27, 2012, the stock price had risen $5.79 (19.3%), from $30 to $35.79. The stock price saw one of its best stretches over the last year between June 25, 2012 and July 3, 2012, when shares rose for seven straight days, increasing 17.2% (+$4.98) over that span. It saw one of its worst periods between July 29, 2011 and August 8, 2011 when shares fell for seven straight days, dropping 22.1% (-$8.64) over that span.

Key Stats:

On the top line, the company is hoping to use this earnings announcement to snap a string of four-straight quarters of revenue decreases. Revenue fell 54.4% in the second quarter of the last fiscal year, 46.4% in third quarter of the last fiscal year and 40% in the fourth quarter of the last fiscal year and then fell again in the first quarter.

The company enters this earnings announcement with steady profits recently. Net income has risen year-over-year average of more than twofold for the last four quarters.

Balance Sheet Analysis: The company’s current ratio of assets to liabilities came in at 1.65 last quarter. The current ratio is an indication of a firm’s liquidity and ability to meet creditor demands and generally, for every dollar the company owes in the short term, it has that figure available in assets that can be converted to cash in the short term. The company regressed in this liquidity measure from 2.36 in the fourth quarter of the last fiscal year to the last quarter driven in part by an increase in liabilities. Current liabilities increased 35.5% to $472 million while assets decreased 5.5% to $776.7 million.

Analyst Ratings: With 13 analysts rating the stock a buy, none rating it a sell and eight rating the stock a hold, there are indications of a bullish stance by analysts.

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(Company fundamentals by Xignite Financials. Earnings estimates provided by Zacks)

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