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Did the Market Get This One Right?

By Joel South and Taylor Muckerman – Feb 26, 2014 at 3:00PM

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Seadrill released fourth-quarter earnings, and the market did not appreciate the results. Did it get this one right?

Despite slightly lower dayrates from ultra-deepwater floaters this past quarter, and flat EBTIDA expected in the first half of 2014, Seadrill (SDRL) decided to increase its quarterly dividend by $0.03, pushing its current yield over 10%. Fourth-quarter earnings did not meet analyst estimates and, with flat cash flows and a heavily levered balance sheet, Seadrill shares solid off Tuesday. With only short-term softening in the offshore rig industry, did the market get this one right? 

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This segment is from Tuesday's edition of "Digging for Value," in which sector analysts Joel South and Taylor Muckerman discuss energy and materials news with host Alison Southwick. The twice-weekly show can be viewed on Tuesdays and Thursdays. It can also be found on Twitter, along with our extended coverage of the energy and materials sectors @TMFEnergy.

Joel South has no position in any stocks mentioned. Taylor Muckerman has no position in any stocks mentioned. The Motley Fool recommends Seadrill. The Motley Fool owns shares of Seadrill. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Stocks Mentioned

SeaDrill Limited Stock Quote
SeaDrill Limited
SDRL
Transocean Stock Quote
Transocean
RIG
$4.19 (2.95%) $0.12

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

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