Critical Survey: Valaris (NYSE:VAL) and Tidewater (NYSE:TDW)

Tidewater (NYSE:TDW) and Valaris (NYSE:VAL) are both mid-cap energy companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, institutional ownership, risk, valuation, dividends, profitability and analyst recommendations.

Risk & Volatility

Tidewater has a beta of 0.53, suggesting that its stock price is 47% less volatile than the S&P 500. Comparatively, Valaris has a beta of 0.94, suggesting that its stock price is 6% less volatile than the S&P 500.

Insider and Institutional Ownership

95.1% of Tidewater shares are owned by institutional investors. Comparatively, 96.7% of Valaris shares are owned by institutional investors. 5.9% of Tidewater shares are owned by company insiders. Comparatively, 0.8% of Valaris shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Profitability

This table compares Tidewater and Valaris’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Tidewater	18.34%	5.36%	3.05%
Valaris	43.95%	9.25%	5.35%

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Tidewater and Valaris, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Tidewater	0	6	2	1	2.44
Valaris	1	8	0	0	1.89

Tidewater presently has a consensus target price of $91.00, indicating a potential downside of 3.55%. Valaris has a consensus target price of $60.94, indicating a potential downside of 28.92%. Given Tidewater’s stronger consensus rating and higher possible upside, analysts plainly believe Tidewater is more favorable than Valaris.

Valuation and Earnings

This table compares Tidewater and Valaris”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Tidewater	$1.35 billion	3.47	$334.66 million	$4.94	19.10
Valaris	$2.37 billion	2.51	$982.80 million	$13.39	6.40

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

Summary

Valaris beats Tidewater on 8 of the 15 factors compared between the two stocks.

About Tidewater

Tidewater Inc., together with its subsidiaries, provides offshore support vessels and marine support services to the offshore energy industry through the operation of a fleet of marine service vessels worldwide. It provides services in support of offshore oil and gas exploration, field development, and production, as well as windfarm development and maintenance, including towing of and anchor handling for mobile offshore drilling units; transporting supplies and personnel necessary to sustain drilling, workover, and production activities; offshore construction, and seismic and subsea support; geotechnical survey support for windfarm construction; and various specialized services, such as pipe and cable laying. The company operates anchor handling towing supply vessels, platform supply vessels, crew boats, utility vessels, and offshore tugs. The company serves integrated and independent oil and gas exploration, field development, and production companies; mid-sized and smaller independent exploration and production companies; foreign government-owned or government-controlled organizations, and other related companies; offshore drilling contractors; and other companies, such as offshore construction, windfarm development, diving, and well stimulation companies. Tidewater Inc. was incorporated in 1956 and is headquartered in Houston, Texas.

About Valaris

Valaris Limited, together with its subsidiaries, provides offshore contract drilling services Gulf of Mexico, South America, North Sea, the Middle East, Africa, and the Asia Pacific. The company operates through four segments: Floaters, Jackups, ARO, and Other. It owns an offshore drilling rig fleet, which include drillships, dynamically positioned semisubmersible rigs, moored semisubmersible rig, and jackup rigs. It serves international, government-owned, and independent oil and gas. Valaris Limited was founded in 1975 and is based in Hamilton, Bermuda.