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Seadrill (NYSE:SDRL) is scheduled to release its 1st quarter 2013 earnings on Tuesday, May 28th. Below I have highlighted this quarter's earnings estimates as well as provided a fundamental look at the company's financial position and current valuation.

Profile and Estimates

Seadrill has a market cap of $18.95 billion and currently trades for $40.39 per share. Shares are up 9.76% YTD and trade 37.45% above their 52-week low of $29.38. Analysts have a mean target price of $43.79 and a median price target of $46.00 on the shares. Fourteen analysts have an average first quarter earnings per share estimate of $0.58 on estimated revenues of $1.14 billion, 8.5% higher than revenues in the first quarter last year.

Financial Position and Valuation

Seadrill continues to grow its rig count and feed demand for its product by taking on more debt. Current D/E of 1.6 is 4X's Ensco's (NYSE:ESV) and 2.28X higher than Transocean's (NYSE:RIG). But, fortunately for shareholders, this risk has been paying off and revenues have grown on average 11.2% a year over the past three years. This top line growth has helped Seadrill take on new business and payout its 8.4% dividend without having to issue more shares.

Going forward, Seadrill recently reported that it will not need new equity to finance its new $8 billion building program and that it also sees net debt moving lower, as early as the second quarter of 2013, when some of its rigs in production start to generate revenues.

In comparison to Ensco and Transocean, Seadrill currently carries an EV/EBITDA of 12.5, 45.18% higher than Ensco's 8.61 and 26% higher than Transocean's 9.92. This, however, seems to be supported by Seadrill's superior net margin when compared to Transocean (24.7% to 1%) and its larger size/earnings potential when compared to Ensco (Seadrill currently has 75 rigs and a backlog of $21 billion which is much greater than Ensco's rig count of 45 and backlog of $4 billion).

Takeaway

Unlike many other companies associated with growth (PEG of 0.43), Seadrill still trades with a relatively normal P/E of 17.28. Management projects greater than 50% EBITDA growth by 2015, keep an eye on Tuesday's earnings to see if this quarter's results are on track to achieve it.

Sources

In addition to the links above, ratios and financial data was sourced from Morningstar.com, which you can find here.

Source: Seadrill's First Quarter Earnings Preview