Dallas, Texas 10/28/2013 (Financialstrend) – Rowan Companies Inc. (NYSE:RDC) is an S&P 500 index tracked $4.52 billion market capped oil and gas drilling company. In the past one month the stock has shed close to 1.19% of its market value. This was following a downgrade by BMO management of Rowan stock along with 5 other mid capped oil and gas drilling companies with operations spread across the major oil production regions. The common factor among the downgraded companies seem to be the potential for slower growth in market value and increase in drop in revenue due to production reduction and uncertainty in global oil pricing.
In spite of the downgrade, long term investors in the Rowan stock can take heart from the fact that the company has managed to win couple of new contracts at better daily rates. The improved earning potential coupled with a uptake in the off shore oil drilling activity portends a increasingly easier operating environment for the firm to up its revenue. The two contracts signed were with a consortium led by EOG and Rowan Louisiana. When this announcement was made in September last week, rating agency Wunderlich had termed the update as positive and had indicated a price target of $41.56 for the stock. At October 25 valuations the price target represents a 13% premium and long term investors in the stock would be looking forward to the stock reaching its potential.
In the past one year, the oil firm has managed to post $1.51 billion and recorded net income of $247 million in the same period. Its sales from oil drilling operations in 2Q which ended on June 30 had registered a 16.5% increase from 2QFY12 and had boosted its earnings per share by 63.4% for the same period. The stock has gained 7.59% in the past 90 days.