Is Independence Contract Drilling Inc. (ICD) A Risky Investment?

Independence Contract Drilling Inc. (NYSE:ICD) finished Wednesday with an addition of $0.68 to close at $4.27, an upside of 18.94 percent. An average of 1,119,120 shares of common stock have been traded in the last five days. There was a gain of $1.17 in the past week. The last 20 days have seen an average of 449,220 shares traded, while the 50-day average volume stands at 229,208.

ICD stock has increased by 59.33% in the last month. The company shares reached their 1-month lowest point of $2.55 on 09/20/21. With the stock rallying to its 52-week high on 02/22/21, shares of the company touched a low of $2.23 and a high of $7.97 in 52 weeks. In spite of this, the price is down -46.42% from the 52-week high.


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Insider Transactions

48 days have passed since Independence Contract Drilling Inc. (ICD) last reported insider trading activity. MONROE WILLIAM, who is 10% Owner, most recently acquired $687 shares at $3.22 per share on Aug 27. In this transaction, the insider spent $2,212. Director, MSD CAPITAL L P, disposed of 9,600 shares at a price of $3.36 on Mar 30. The insider now owns more than $32,256 worth of shares. Prior to that, Director MSD Partners, L.P. went on to Sale 40,400 shares at $3.36 each on Mar 30. An amount of $135,744 was transacted.

Valuation Metrics

Independence Contract Drilling Inc. (ICD) has a trailing price-to-earnings (P/E) ratio of 18.90 for the broader industry and 19.70 for the sector. The stock’s beta is 6.80. Other valuation ratios to consider include the trailing price-to-sales (P/S) ratio at 0.52, the price-to-book (PB) ratio at 0.13.

The quick ratio of Independence Contract Drilling Inc. for the three months ended June 29 was 0.60, and the current ratio was 0.60, indicating that the company is not able to meet its debt obligations. Further, the company has a long term debt to equity ratio of 0.61 and a total debt to equity ratio of 0.67 for the quarter ending June 29. On the profitability front, the trailing 12-month gross margin is 10.70% against a 5-year average of -2.5%. Independence Contract Drilling Inc.’s EBITDA margin for the year ending June 29 is 5.47%. Its gross profit as reported stood at -$82.16 million compared to revenue of $83.42 million.

For investors, determining the potential profitability of the investment also depends on the performance of the company’s management. In the past 12 months, Independence Contract Drilling Inc.’s return on assets was -21.50%, compared to -10.3% over the last five years. In the past year, the return on investment has been -20.90%, and the 5-year average is -9.4%. Meanwhile, the return on equity (ROE) for the past 12 months has been -36.00% and the 5-year average holds at -15.1%. For the broader industry, ROE averaged 12.45 over the past year.

Earnings Surprise

In the quarter under review, the net income was up than the previous quarter. The company posted a net income of $19.82 million in the quarter, while revenues of $15.54 million were shrunk -94.2%. The analyst consensus anticipated Independence Contract Drilling Inc.’s latest quarter earnings to come in at -$2.5 per share, but it turned out to be -$2.18, a 12.80% surprise. For the quarter, EBITDA amounted to -$1.3 million. Shareholders own equity worth $7.24 million.

Technical Picture

From a technical analysis perspective, let’s take a brief look at Independence Contract Drilling Inc. (ICD) price momentum. RSI 9-day as of the close on 13 October was 88.87%, suggesting the stock is Overbought, with historical volatility in this time frame at 97.30%.

As of today, ICD’s price is $3.70 +37.74% or $1.17 from its 5-day moving average. ICD is currently trading +56.41% higher than its 20-day SMA and +36.42% higher than its 100-day SMA. However, the stock’s current price level is +37.30% above the SMA50 and +36.42% above the SMA200.

The stochastic %K and %D were 80.27% and 76.84%, respectively, and the average true range (ATR) was 0.37. With the 14-day stochastic at 87.65% and the average true range at 0.32, the RSI (14) stands at 81.71%. The stock has reached 0.39 on the 9-day MACD Oscillator while the 14-day reading was at 0.54.

Analyst Ratings

B. Riley FBR downgraded Independence Contract Drilling Inc. (NYSE: ICD) to a a Neutral rating in its most recent analyst report. Previously, the stock was rated as a a Buy.The consensus rating for Independence Contract Drilling Inc. (ICD) among analysts is Hold. According to current brokerage recommendations, 0 brokerage firms advise that investors sell ICD, while 1 suggest investors hold. There are 0 analysts who rate the stock as underweight. The stock is rated overweight by 0 analysts, while 0 others rate it as a “buy”.

What is ICD’s price target for the next 12 months?

Analysts predict a range of price targets between $4.00 and $4.00, with a median target of $4.00. Taking a look at these predictions, the average price target given by analysts for Independence Contract Drilling Inc. (ICD) stock is $4.00.

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