Reviewing Pacific Drilling (OTCMKTS:PACDQ) and Precision Drilling (PDS)

Precision Drilling (NYSE: PDS) and Pacific Drilling (OTCMKTS:PACDQ) are both small-cap oils/energy companies, but which is the superior business? We will compare the two companies based on the strength of their profitability, valuation, risk, dividends, earnings, analyst recommendations and institutional ownership.

Volatility and Risk

Precision Drilling has a beta of 1.74, indicating that its stock price is 74% more volatile than the S&P 500. Comparatively, Pacific Drilling has a beta of 3.21, indicating that its stock price is 221% more volatile than the S&P 500.

Valuation & Earnings

This table compares Precision Drilling and Pacific Drilling’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Precision Drilling $718.34 million 1.18 -$117.47 million ($0.30) -9.63
Pacific Drilling $769.47 million 0.02 -$37.15 million ($20.59) -0.03

Pacific Drilling has higher revenue and earnings than Precision Drilling. Precision Drilling is trading at a lower price-to-earnings ratio than Pacific Drilling, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

49.3% of Precision Drilling shares are owned by institutional investors. Comparatively, 0.4% of Pacific Drilling shares are owned by institutional investors. 1.0% of Precision Drilling shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares Precision Drilling and Pacific Drilling’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Precision Drilling -9.45% -5.93% -2.73%
Pacific Drilling -101.35% -17.63% -7.68%

Analyst Recommendations

This is a breakdown of current recommendations for Precision Drilling and Pacific Drilling, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Precision Drilling 1 5 6 1 2.54
Pacific Drilling 0 0 0 0 N/A

Precision Drilling presently has a consensus target price of $5.04, indicating a potential upside of 74.31%. Given Precision Drilling’s higher possible upside, equities analysts clearly believe Precision Drilling is more favorable than Pacific Drilling.

Summary

Precision Drilling beats Pacific Drilling on 10 of the 13 factors compared between the two stocks.

Precision Drilling Company Profile

Precision Drilling Corporation (Precision) is an oilfield services company. The Company provides onshore drilling and completion and production services to exploration and production companies in the oil and natural gas industry. The Company operates through two segments: Contract Drilling Services, and Completion and Production Services. The Contract Drilling Services segment operates its rigs in Canada, the United States and internationally. The Completion and Production Services segment provides completion and workover services and ancillary services to oil and natural gas exploration and production companies in Canada and the United States. As of December 31, 2016, the Contract Drilling Services segment consisted of 255 land drilling rigs, including 135 in Canada, 103 in the United States, five in Mexico, four in Saudi Arabia, five in Kuwait, two in the Kurdistan region of Iraq and one in the country of Georgia.

Pacific Drilling Company Profile

Pacific Drilling S.A. is an international offshore drilling contractor. The Company provides offshore drilling services to the oil and natural gas industry through the use of high-specification rigs. The Company’s primary business is to contract its high-specification rigs, related equipment and work crews, primarily on a day rate basis, to drill wells for its clients. The Company is engaged in drillships segment. The Company focuses on the high-specification segment of the floating rig market. The Company considers high-specification requirements to include rigs in water depths of approximately 7,500 feet or projects requiring advanced operating capabilities, such as hook-loads (>800 tons), accommodations (over 200 beds), mud storage and pumping capacity, and deck-load and space capabilities. The Company’s contract drillships operate in the deepwater regions of the United States, Gulf of Mexico and Nigeria.

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