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Transocean (RIG) Q2 Earnings on Deck: What Would it Reveal?
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Transocean Ltd. (RIG - Free Report) is set to release second-quarter results on Jul 31. The current Zacks Consensus Estimate for the to-be-reported quarter is a loss of 12 cents per share on revenues of $724.4 million.
Let’s delve into the factors that might have influenced the offshore driller’s performance in the June quarter. But it’s worth taking a look at RIG’s previous-quarter results first.
Highlights of Q1 Earnings & Surprise History
In the last reported quarter, the Switzerland-based rig supplier missed the consensus mark due to lower contribution from Harsh Environment floaters. Transocean had reported an adjusted loss per share of 38 cents, 18 cents wider than the Zacks Consensus Estimate. However, revenues of $649 million generated by the firm came in above the Zacks Consensus Estimate of $642 million on the back of more days of work for RIG’s vessels.
RIG beat the Zacks Consensus Estimate for earnings twice in the last four quarters and missed in the other two, resulting in a negative earnings surprise of 44.7%, on average. This is depicted in the graph below:
The Zacks Consensus Estimate for the second-quarter bottom line has remained unchanged in the past seven days. The estimated figure indicates a 20% deterioration year over year. However, the Zacks Consensus Estimate for revenues suggests a marginal 0.3% increase from the year-ago period.
Factors to Consider
Transocean is expected to have been hurt by a drop in utilization. As a reflection of the tepidness in the drilling landscape, our estimate for the second-quarter average utilization is pegged at 55.2%, down 3% from a year earlier on the back of lukewarm activity. The year-over-year deterioration in utilization has most likely impacted Transocean’s revenues and cash flows.
On a further bearish note, the increase in Transocean’s costs might have dented its to-be-reported bottom line. Going by our model, RIG’s total costs and expenses are likely to have gone up 8.6% year over year to $716.6 million in the second quarter. The upward cost trajectory could be attributed to the ongoing inflationary environment and tight labor market.
On a somewhat positive note, our model forecasts revenue efficiency to average an impressive 96.5% in the to-be-reported quarter. This is an indication of minimal loss of revenues due to downtime and Transocean’s superior efficiency in translating its industry-leading backlog of $9.2 billion into cash.
What Does Our Model Say?
The proven Zacks model does not conclusively show that Transocean is likely to beat estimates in the second quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. But that’s not the case here.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, for this company is -7.14%.
Zacks Rank: RIG currently carries a Zacks Rank #4 (Sell).
Stocks to Consider
While an earnings beat looks uncertain for Transocean, here are some firms from the energy space that you may want to consider on the basis of our model:
TC Energy Corporation (TRP - Free Report) has an Earnings ESP of +14.72% and a Zacks Rank #2. The firm is scheduled to release earnings on Jul 28.
TC Energy beat the Zacks Consensus Estimate for earnings in three of the last four quarters and missed in the other. It has a trailing four-quarter earnings surprise of 2.1%, on average. Valued at around $40.7 billion, TRP has lost 27.9% in a year.
MPLX LP (MPLX - Free Report) has an Earnings ESP of +1.01% and a Zacks Rank #2. The firm is scheduled to release earnings on Aug 1.
MPLX has a trailing four-quarter earnings surprise of 5.9%, on average. Over the past 60 days, the partnership saw the Zacks Consensus Estimate for 2023 move up 8.5%. Valued at around $35 billion, the company has gained 11.7% in a year.
Murphy USA (MUSA - Free Report) has an Earnings ESP of +0.20% and a Zacks Rank #2. The firm is scheduled to release earnings on Aug 2.
Murphy USA has a trailing four-quarter earnings surprise of 15.6%, on average. Over the past 60 days, MUSA saw the Zacks Consensus Estimate for 2023 move up 1.7%. Valued at around $6.9 billion, the company has gained 17.5% in a year.
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Transocean (RIG) Q2 Earnings on Deck: What Would it Reveal?
Transocean Ltd. (RIG - Free Report) is set to release second-quarter results on Jul 31. The current Zacks Consensus Estimate for the to-be-reported quarter is a loss of 12 cents per share on revenues of $724.4 million.
Let’s delve into the factors that might have influenced the offshore driller’s performance in the June quarter. But it’s worth taking a look at RIG’s previous-quarter results first.
Highlights of Q1 Earnings & Surprise History
In the last reported quarter, the Switzerland-based rig supplier missed the consensus mark due to lower contribution from Harsh Environment floaters. Transocean had reported an adjusted loss per share of 38 cents, 18 cents wider than the Zacks Consensus Estimate. However, revenues of $649 million generated by the firm came in above the Zacks Consensus Estimate of $642 million on the back of more days of work for RIG’s vessels.
RIG beat the Zacks Consensus Estimate for earnings twice in the last four quarters and missed in the other two, resulting in a negative earnings surprise of 44.7%, on average. This is depicted in the graph below:
Transocean Ltd. Price and EPS Surprise
Transocean Ltd. price-eps-surprise | Transocean Ltd. Quote
Trend in Estimate Revision
The Zacks Consensus Estimate for the second-quarter bottom line has remained unchanged in the past seven days. The estimated figure indicates a 20% deterioration year over year. However, the Zacks Consensus Estimate for revenues suggests a marginal 0.3% increase from the year-ago period.
Factors to Consider
Transocean is expected to have been hurt by a drop in utilization. As a reflection of the tepidness in the drilling landscape, our estimate for the second-quarter average utilization is pegged at 55.2%, down 3% from a year earlier on the back of lukewarm activity. The year-over-year deterioration in utilization has most likely impacted Transocean’s revenues and cash flows.
On a further bearish note, the increase in Transocean’s costs might have dented its to-be-reported bottom line. Going by our model, RIG’s total costs and expenses are likely to have gone up 8.6% year over year to $716.6 million in the second quarter. The upward cost trajectory could be attributed to the ongoing inflationary environment and tight labor market.
On a somewhat positive note, our model forecasts revenue efficiency to average an impressive 96.5% in the to-be-reported quarter. This is an indication of minimal loss of revenues due to downtime and Transocean’s superior efficiency in translating its industry-leading backlog of $9.2 billion into cash.
What Does Our Model Say?
The proven Zacks model does not conclusively show that Transocean is likely to beat estimates in the second quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. But that’s not the case here.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, for this company is -7.14%.
Zacks Rank: RIG currently carries a Zacks Rank #4 (Sell).
Stocks to Consider
While an earnings beat looks uncertain for Transocean, here are some firms from the energy space that you may want to consider on the basis of our model:
TC Energy Corporation (TRP - Free Report) has an Earnings ESP of +14.72% and a Zacks Rank #2. The firm is scheduled to release earnings on Jul 28.
You can see the complete list of today’s Zacks #1 Rank stocks here.
TC Energy beat the Zacks Consensus Estimate for earnings in three of the last four quarters and missed in the other. It has a trailing four-quarter earnings surprise of 2.1%, on average. Valued at around $40.7 billion, TRP has lost 27.9% in a year.
MPLX LP (MPLX - Free Report) has an Earnings ESP of +1.01% and a Zacks Rank #2. The firm is scheduled to release earnings on Aug 1.
MPLX has a trailing four-quarter earnings surprise of 5.9%, on average. Over the past 60 days, the partnership saw the Zacks Consensus Estimate for 2023 move up 8.5%. Valued at around $35 billion, the company has gained 11.7% in a year.
Murphy USA (MUSA - Free Report) has an Earnings ESP of +0.20% and a Zacks Rank #2. The firm is scheduled to release earnings on Aug 2.
Murphy USA has a trailing four-quarter earnings surprise of 15.6%, on average. Over the past 60 days, MUSA saw the Zacks Consensus Estimate for 2023 move up 1.7%. Valued at around $6.9 billion, the company has gained 17.5% in a year.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.