After staying quite for a long time Diamond Offshore Drilling, Inc. (NYSE:DO) shares have recently been behaving interestingly to keep investors awake. Analysts often use price and volume data to predict future stock performance. In the case of DO, the chart has some interesting things to say about where the stock might be headed.
How has the stock performed recently?
Diamond Offshore Drilling, Inc. (NYSE:DO) in the last month has increased +3.21%. Shares are now up over the past year, outperforming the broad market by -100% and underperformed a peer group of similar companies by -117%. After the latest session, which saw the stock close at a price of $16.08, DO sits below its 52-week high. Diamond Offshore Drilling, Inc. (NYSE:DO) has been trading in a bullish manner, based on the relative positions of the stock’s 20 and 200 day moving averages.
Of course, these surface-level price movements don’t tell us much about the direction that DO may be headed in the future. If we want to get a sense of DO’s future performance, we have to look at the speed and size of these price movements. Using what are known as momentum indicators, we can use the stock’s price momentum to get a sense of whether the stock is in the midst of, or nearing the end of, a current trend. Two such indicators are the RSI (Relative Strength Index) and the Stochastic %k Oscillator, which fluctuate on a scale of 0 to 100. A reading above 70 indicates that a stock is overvalued, and a reading below 30 implies that it is undervalued. The 20-day RSI for DO is 54.26%, which suggests that the stock is not particularly expensive or cheap, and not predisposed to a reactive price movement based on this measure. The 20-day Stochastic %k measure, which sits at 36.14%, tells a similar story, and suggests that DO currently trades in neutral territory.
What do the trading volumes reveal?
In addition to price, analysts use volume trends to predict future performance. The level of trading activity in a stock is often a good proxy for the level of interest and enthusiasm for the name within the investment community. A sudden increase in activity can be a sign that investors are trading in anticipation of a catalyst. Diamond Offshore Drilling, Inc. (DO) average trading volume of 2,598,725 during the past month is 13.2% below its average volume over the past year, indicating that investors have been less active than usual in the stock in recent times.
What do the analysts think?
DO is currently overvalued by 16.02% relative to the average 1-year price target of $13.86 taken from a group of Wall Street Analysts. The average investment recommendation on a scale of 1 to 5 (1 being a strong buy, 3 a hold, and 5 a sell) is 3.30, which implies that analysts are generally neutral in their outlook for DO over the next year.
How risky is the stock?
When analyzing a stock’s price performance, it’s essential to take risk into account. Beta, which measures a stock’s volatility relative to the overall market, can be used to gauge the level of systematic risk associated with a particular stock.
Diamond Offshore Drilling, Inc. (NYSE:DO) has a beta of 1.30, compared to a beta of 1 for the market, which implies that the stock’s price movements are more extreme than the market as a whole. DO therefore has a above average level of market risk. During the past couple of weeks, DO average daily volatility was 37.61%, which is 5.85 percentage points lower than the average volatility over the past 100 days.