Ocean Rig UDW (NASDAQ: ORIG) and North Atlantic Drilling (NYSE:NADL) are both small-cap oils/energy companies, but which is the better investment? We will compare the two companies based on the strength of their risk, dividends, analyst recommendations, institutional ownership, valuation, earnings and profitability.

Profitability

This table compares Ocean Rig UDW and North Atlantic Drilling’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ocean Rig UDW -195.64% 16.32% 5.96%
North Atlantic Drilling -54.37% -55.80% -6.69%

Risk and Volatility

Ocean Rig UDW has a beta of 1.8, indicating that its share price is 80% more volatile than the S&P 500. Comparatively, North Atlantic Drilling has a beta of 3, indicating that its share price is 200% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current recommendations for Ocean Rig UDW and North Atlantic Drilling, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ocean Rig UDW 0 0 0 0 N/A
North Atlantic Drilling 1 0 0 0 1.00

North Atlantic Drilling has a consensus price target of $2.00, indicating a potential upside of 78.57%. Given North Atlantic Drilling’s higher possible upside, analysts clearly believe North Atlantic Drilling is more favorable than Ocean Rig UDW.

Valuation & Earnings

This table compares Ocean Rig UDW and North Atlantic Drilling’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Ocean Rig UDW $1.65 billion N/A $1.10 billion ($40.71) 0.00
North Atlantic Drilling $343.90 million 0.08 $157.90 million ($7.96) -0.14

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

Institutional and Insider Ownership

10.7% of Ocean Rig UDW shares are held by institutional investors. Comparatively, 5.7% of North Atlantic Drilling shares are held by institutional investors. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Summary

Ocean Rig UDW beats North Atlantic Drilling on 5 of the 9 factors compared between the two stocks.

Ocean Rig UDW Company Profile

Ocean Rig UDW Inc is a Cyprus-based offshore drilling contractor that provides oilfield services for oil and gas exploration, development and production drilling, and specializes in the ultra-deepwater and harsh-environment segment of the drilling industry. The Company owns and operates approximately 13 offshore ultra deepwater drilling units, comprising of ultra deepwater semisubmersible drilling rigs and ultra deepwater drill-ships. The Company’s drilling units include Leiv Eiriksson, Ocean Rig Corcovado, Ocean Rig Poseidon, Ocean Rig Mykonos, Ocean Rig Mylos, Ocean Rig Skyros and Ocean Rig Athena. In addition, the Company, through its wholly owned subsidiary, provides supervisory management services including onshore management to its operating drilling units and drilling units under construction.

North Atlantic Drilling Company Profile

North Atlantic Drilling Ltd. operates as an offshore drilling contractor in the North Atlantic region. The company provides harsh environment offshore drilling services to the oil and gas industry primarily in Norway, the United Kingdom, and the Russian Federation. As of December 31, 2016, it owned seven offshore drilling rigs, including three semi-submersibles, one ultra-deep water drillship, and three jack-up rigs. The company was founded in 2011 and is headquartered in Hamilton, Bermuda. North Atlantic Drilling Ltd. is a subsidiary of Seadrill Limited.

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