Diamond Offshore Drilling Inc.
) will release its fourth quarter 2012 financial results on Feb
5, 2013. We expect the company to beat expectations.
DIAMOND OFFSHOR (DO): Free Stock Analysis
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Why a Likely Positive Surprise?
Our proven model shows that Diamond is likely to beat earnings
because it has the right combination of two key ingredients.
Positive Zacks ESP
: Expected Surprise Prediction or ESP (Read:
Zacks Earnings ESP: A Better Method
), which represents the difference between the Most Accurate
Estimate and the Zacks Consensus Estimate, is at +0.91%. This is
meaningful and a leading indicator of a likely positive earnings
surprise for this offshore driller.
Zacks #3 Rank (Hold)
: We note that stocks with Zacks Ranks of #1, 2 and 3 have a
significantly higher chance of beating earnings. The Sell rated
stocks (#4 and 5) should never be considered going into an
The combination of Diamond's Zacks Rank #3 (Hold) and +0.91% ESP
makes us confident of a positive earnings beat this release.
Diamond's efforts to increase its footprint in emerging markets
(such as Brazil and West Africa) as well as benefits from the
recent deepwater discoveries are expected to lead to a positive
earnings surprise. Again, the gradual improvement in the Gulf of
Mexico (especially after the deepwater drilling ban was lifted),
along with better bidding activity, is likely to benefit a
contract drilling company like Diamond Offshore.
The positive trend was also seen in the 26.73% earnings surprise
in the last reported quarter. This was backed by solid growth
witnessed in its backlog with extensions as well as new contracts
at increased dayrates on its drillships and newbuilds.
Other Stocks to Consider
Diamond is not the only firm looking up this earnings season. We
also see likely earnings beats coming from these 3 industry
EOG Resources, Inc.
), earnings ESP of +2.19% and Zacks Rank #3 (Hold).
Enbridge Energy Partners LP
), earnings ESP of +3.85% and Zacks Rank #3 (Hold).
Southwestern Energy Co.
), earnings ESP of +2.33% and Zacks Rank #3 (Hold).