Please ensure Javascript is enabled for purposes of website accessibility

Here’s Why RigNet, Inc.'s Slide Continued in November

By Matthew DiLallo - Dec 7, 2017 at 1:13PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The offshore communications company missed analysts’ expectations once again.

What happened

Shares of RigNet, Inc. (RNET) declined more than 6% in November and have now lost more than a third of their value this year. Driving the sell-off is the continued weakness in the offshore communication service company's financial results.  

So what

RigNet reported its third-quarter results last month. On the plus side, revenue rose 0.5% to $50.8 million. However, that was about a half-million dollars below analysts' expectations. Meanwhile, the company's net loss widened to $0.23 per share, which missed the consensus estimate by $0.14 share. That wasn't the first time it missed expectations as it has fallen short of analysts' estimates on both the top and bottom lines in all three quarters of 2017.

An offshore drilling rig in stormy weather.

Image source: Getty Images.

Two factors have been weighing on its results this year. First, the offshore drilling market remains challenging because oil companies have significantly pulled back sending on new wells. As a result, many rigs remain idle, which has led to less work for RigNet. In addition, the company hasn't kept as tight a lid on expenses this year. Some of that is because it has been making acquisitions to diversify away from the offshore drilling market. While these moves should improve earnings in future quarters, they're weighing on results in the interim.

Now what

The oil market is starting to get better thanks in part to OPEC's efforts to stabilize prices. However, RigNet's core offshore drilling market is still at least a year away from returning to normal according to analysts. For example, UBS expects rig utilization to "improve slightly" next year before demand picks up in 2019 and 2020. That suggests 2018 could remain challenging for RigNet, which will likely lead to more volatility for investors.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

RigNet, Inc. Stock Quote
RigNet, Inc.

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/04/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.