Transocean (RIG) exceeded revenue expectations, but is it a good investment?

1:57 pm ET, 31 Jul 2018

Transocean Ltd. (RIG) reported earnings on July 30 after market close. The report was for the fiscal quarter ending June 2018. Shares are trading at 12.97, down 3%.

What news should investors be paying attention to?  

RIG took $548M in write-downs of three deepwater rigs previously announced for retirement.  The total amount of special charges was nearly $1.2B in Q2.  

The company reported a smaller than expected loss and a 19% year-over-year increase in contract drilling revenue to $790M.  The Q2 revenue increase was driven by a full quarter’s contribution from the four harsh environment semisubmersibles acquired from Songa in January and the Deepwater Poseidon ultra-deepwater drilling which started in February.

Q2 revenue efficiency for the company was 97.4% vs. 91.5% in Q1, as the quarter marked the first full quarter of operations for all five of its newest ultra-deepwater drillships and the four semisubmersibles acquired from Songa.

Transocean Ltd. has a mixed history of beating analysts’ earnings estimates.  In the past four quarters, the company: 

  • Beat analyst EPS estimates by 11 cents ($0 actuals vs. $-.11 forecast) in FQ2’17;
  • Beat analyst EPS estimates by 20 cents ($.16 actuals vs. $-.04 forecast) in FQ3’17;
  • Beat analyst EPS estimates by 3 cents ($-.24 actuals vs. $-.27 forecast) in FQ4’17;
  • Missed analyst EPS estimates by 12 cents ($-.48 actuals vs. $-.36 forecast) in FQ1’18.

Over the last month, Transocean Ltd. (RIG) returned -0.47%.

Transocean Ltd. (RIG) average analyst price target ($12.53) is -0.87% below its current price ($12.64).

For the latest price and information on Transocean Ltd., please visit Finstead and search for "RIG price" or "RIG news".

Transocean Ltd. (RIG) Stock Guide

Updated at: 3:33 pm ET, 02 Sep 2020

Before we start: if you're looking for RIG stock price, you can quickly find it out by visiting Finny and typing "RIG quote". If you're looking for a quick scoop on RIG stock (chart, price target, market cap, news and buy or sell analysis), go to Finny and look for "RIG". You'll get all this info in one place. Or you can just type "RIG news" to get the latest stock news.

Looking to buy or sell Transocean Ltd. (RIG)? Interested in getting the full scoop on RIG, including earnings and dividends, stock forecast, buy or sell analysis and key stats? If so, you came to the right place.

In this RIG stock guide, we'll address key questions about RIG, above and beyond what you can find on Yahoo Finance, Zacks, MarketWatch or Morningstar.

Here is what you'll be able to find in this guide:

Earnings and Dividends: earnings, earnings date, dividend rate and dividend yield;
Analyst Predictions: stock forecast and analyst ratings;
Analysis: Finny Score and buy or sell analysis;
Key Stats: revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio, industry, sector, and number of employees.

And here is the list of questions we'll answer:
1. What are RIG earnings?
2. When is RIG earnings date?
3. What is RIG stock forecast (i.e., prediction)?
4. RIG buy or sell? What is RIG Finny Score?
5. What are the reasons to buy RIG? Why should I buy RIG stock?
6. What are the reasons to sell RIG? Why should I sell RIG stock?
7. What are RIG key stats: revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio industry, sector, and number of employees?

So let's start. Scroll down to the question that interests you the most.

Earnings and Dividends

1. What are RIG earnings?

RIG trailing 12-month earnings per share (EPS) is -$2.88.

2. When is RIG earnings date?

RIG earnings date is October 26, 2020.

Analyst Predictions

3. What is RIG stock forecast (i.e., prediction)?

Based on RIG analyst price targets, RIG stock forecast is $2.66 (for a year from now). That means the average analyst price target for RIG stock is $2.66. The prediction is based on 36 analyst estimates.

The low price target for RIG is $0.10, while the high price target is $12.00.

RIG analyst rating is Hold.

Analysis

4. RIG buy or sell? What is RIG Finny Score?

#{finnyScore:55}Our quantitative analysis shows 6 reasons to buy and 5 reasons to sell RIG, resulting in Finny Score of 55.

5. What are the reasons to buy RIG? Why should I buy RIG stock?

Here are the reasons to buy RIG stock:

  • Transocean is doing the right thing by scrapping older rigs, which will help balance rig supply and demand, and in the longer term, provide greater support for economic day rates for the company's more valuable rigs.
  • While the last few years have been brutal for the company, Transocean rightsized its business to be able to survive the cyclical downturn facing deep-water drilling.
  • Transocean will likely benefit from robust demand in the upcoming years, because less oil is discovered on land and companies are digging deeper to find new reserves. As a leader in deep-sea drilling, Transocean is also technologically advanced and has a versatile drilling fleet.
  • Transocean has a strong backlog of $12.5 billion. The Ocean Rig offshore acquisition has increased long-term earnings visibility. The Ocean Rig fleet bodes well with the Transocean best-in-class portfolio.
  • RIG stock price ($1.22) is close to the 52-week low ($0.81). Perhaps now is a good time to buy? See RIG price chart.
  • RIG quarterly revenue growth was 22.70%, higher than the industry and sector average revenue growth (0.15% and -0.04%, respectively). See RIG revenue growth chart.
  • RIG average analyst price target ($2.66) is above its current price ($1.22). See RIG price target chart.
  • RIG cash to debt ratio is 0.17, higher than the average industry (0.07) and sector (0.09) cash to debt ratio. See RIG cash to debt chart.
  • RIG Enterprise Value/Revenue multiple is 2.54, which is low compared to its industry peers’ Enterprise Value/Revenue multiples. See RIG Enterprise Value/Revenue chart.
  • RIG Enterprise Value/EBITDA multiple is 7.51, which is low compared to its industry peers’ Enterprise Value/EBITDA ratios. See RIG Enterprise Value/EBITDA chart.

6. What are the reasons to sell RIG? Why should I sell RIG stock?

Let's look at the reasons to sell RIG stock (i.e., the bear case):

  • The offshore rig market is experiencing its worst downturn in decades and profitability is going to be increasingly pressured as existing rig contracts expire in the coming years.
  • Operational inefficiencies have increased the company's operating costs. Further, rig impairment charges might put further pressure on the company's profits in the coming quarters.
  • The floater rig demand is expected to be muted in the coming months which will lead to lower utilization for the offshore drillers.
  • The acquisition of Ocean Rig will lead to a cash outgo of $1.1 billion and will put pressure on Transocean's cash flows.
  • RIG profitability is declining. The YoY profit margin change was -112.81 percentage points. See RIG profitability chart.
  • RIG Price/Book ratio is 0.07, which is high compared to its industry peers’ P/B ratios. See RIG forward Price/Book ratio chart.
  • RIG Price/Sales ratio is 0.24, which is high compared to its industry peers’ P/S ratios. See RIG forward Price/Sales ratio chart.
  • RIG short share of float is 15.43%. The stock is much more frequently shorted than the average industry, sector or S&P 500 stock. See RIG short share of float chart.
  • RIG short interest (days to cover the shorts) ratio is 4.92. The stock garners more short interest than the average industry, sector or S&P 500 stock. See RIG short interest ratio chart.

Key Stats

7. What are RIG key stats : revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio industry, sector, and number of employees?

Let's look at the key statistics for RIG:

Metrics RIG
Price $1.13
Average Price Target / Upside N/A
Average Analyst Rating N/A
Forward Dividend Yield 0.00%
Industry Oil & Gas Drilling
Sector Energy
Number of Employees 6,700
Market Cap $768.27M
Forward P/E Ratio -1.15
Price/Book Ratio 0.24
Revenue (TTM) $3.26B
YoY Quarterly Revenue Growth 22.70%
Profit Margin -54.06%

If you liked this analysis, check out Stock Guides for other stocks.

Follow Us