Analyzing Seadrill (NYSE:SDRL) & Cactus (NYSE:WHD)

Seadrill (NYSE:SDRL) and Cactus (NYSE:WHD) are both mid-cap energy companies, but which is the superior investment? We will contrast the two companies based on the strength of their earnings, dividends, profitability, institutional ownership, analyst recommendations, risk and valuation.

Profitability

This table compares Seadrill and Cactus’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Seadrill	0.07%	0.64%	0.46%
Cactus	6.69%	18.24%	11.34%

Volatility and Risk

Seadrill has a beta of 1.25, indicating that its share price is 25% more volatile than the S&P 500. Comparatively, Cactus has a beta of 1.42, indicating that its share price is 42% more volatile than the S&P 500.

Insider & Institutional Ownership

95.7% of Seadrill shares are held by institutional investors. Comparatively, 85.1% of Cactus shares are held by institutional investors. 0.5% of Seadrill shares are held by insiders. Comparatively, 12.9% of Cactus shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Earnings & Valuation

This table compares Seadrill and Cactus”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Seadrill	$1.44 billion	2.28	-$77.00 million	$0.03	1,747.93
Cactus	$1.36 billion	3.83	$166.01 million	$1.44	45.20

Cactus has lower revenue, but higher earnings than Seadrill. Cactus is trading at a lower price-to-earnings ratio than Seadrill, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Seadrill and Cactus, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Seadrill	0	3	3	3	3.00
Cactus	0	3	3	0	2.50

Seadrill presently has a consensus price target of $59.40, suggesting a potential upside of 13.28%. Cactus has a consensus price target of $73.25, suggesting a potential upside of 12.55%. Given Seadrill’s stronger consensus rating and higher probable upside, research analysts clearly believe Seadrill is more favorable than Cactus.

Summary

Cactus beats Seadrill on 8 of the 14 factors compared between the two stocks.

About Seadrill

Seadrill Ltd. engages in the provision of offshore drilling services to the oil and gas industry. It operates through the following segments: Floaters, Jack-up rigs, and Other. The Floaters segment encompasses drilling, completion, and maintenance of offshore exploration and production wells. the Jack-up Rigs segment includes drilling contracts relate to jack-up rigs for operations in harsh and benign environments in shallow water. The Other segment represents management services to third parties and related parties. The company was founded on May 10, 2005 and is headquartered in Hamilton, Bermuda.

About Cactus

Cactus, Inc., together with its subsidiaries, designs, manufactures, sells, and leases pressure control and spoolable pipes in the United States, Australia, Canada, the Middle East, and internationally. It operates through two segments, Pressure Control and Spoolable Technologies. The Pressure Control segment designs, manufactures, sells, and rents a range of wellhead and pressure control equipment under the Cactus Wellhead brand name through service centers. Its products are sold and rented primarily for onshore unconventional oil and gas wells for drilling, completion, and production phases of the wells. This segment also provides field services to install, maintain, and handle the equipment. The Spoolable Technologies segment designs, manufactures, and sells spoolable pipes and associated end fittings under the FlexSteel brand name. Its products are primarily used to transport oil, gas, and other liquids. This segment also provides field services and rental items through service centers and pipe yards, as well as offers equipment and services internationally. In addition, the company offers repair and refurbishment services. Cactus, Inc. was founded in 2011 and is headquartered in Houston, Texas.