We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Transocean (RIG) Up 6.6% Since Earnings Report: Can It Continue?
Read MoreHide Full Article
A month has gone by since the last earnings report for Transocean Ltd. (RIG - Free Report) . Shares have added about 6.6% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is RIG due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Fourth Quarter 2017 Results
Transocean posted narrower-than-expected loss per share in the fourth quarter of 2017. The offshore driller’s adjusted loss per share in the quarter came in at 24 cents compared with the Zacks Consensus Estimate of a loss of 27 cents. While investors should note that the company has not missed estimates in the past 19 quarters, Transocean reported an adjusted loss per share in the quarter under review, which compares unfavorably with adjusted earnings of 63 cents a share in the prior-year quarter. Lower revenues and higher costs led to weaker results.
Total quarterly revenues of $629 million were down 35.4% year over year on lower dayrates and lower revenue efficiency. The top line also missed the Zacks Consensus Estimate of $634 million. Contract drilling revenues in the quarter declined 25.7% to $589 million from the year-ago $793 million. Transocean’s high-specification floaters contributed about 86.4% to total contract drilling revenues, while deepwater floaters, midwater floaters, high-specification jackups and others accounted for the remainder.
Revenue efficiency in the quarter reduced to 92.4%, compared with 100.3% and 97.1% in the year-ago quarter and prior quarter, respectively.
Costs
Transocean’s operating and maintenance expenses rose 23.9% to $389 million year over year. The costs also increased from the prior-quarter figure of $323 million. The operational inefficiency and lost revenues resulted the company’s cash flow from operating activities to plunge 59.4% year over year. In the fourth quarter of 2017, cash flow from operating activities stood at $257 against $633 million and $384 million recorded in the fourth quarter of 2016 and third quarter of 2017, respectively.
Dayrates and Utilization
Compared with the fourth quarter of 2016, dayrates fell almost 10% (from $329,400 to $269,700), unfavorably impacted by declines in all types of rigs barring high-specification jackups.
However, the overall fleet utilization was 53% during the quarter, up from the year-ago utilization rate of 46%.
Capital Expenditure & Balance Sheet
Transocean spent $111 million on capital expenditures in the fourth quarter of 2017 versus $272 million recorded in the year-ago quarter. The capex was primarily allocated toward newbuild rigs namely Deepwater Poseidon and Deepwater Pontus.
As of Dec 31, 2017, Transocean had cash and cash equivalents of $2,519 million. Long-term debt of the company was $7,146 million with a debt-to-capitalization ratio of 36%.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimate flatlined during the past month. There has been one revision higher for the current quarter compared to one lower.
At this time, RIG has a poor Growth Score of F. Its Momentum is doing a bit better with a D. The stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for value based on our styles scores.
Outlook
RIG has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Transocean (RIG) Up 6.6% Since Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Transocean Ltd. (RIG - Free Report) . Shares have added about 6.6% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is RIG due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Fourth Quarter 2017 Results
Transocean posted narrower-than-expected loss per share in the fourth quarter of 2017. The offshore driller’s adjusted loss per share in the quarter came in at 24 cents compared with the Zacks Consensus Estimate of a loss of 27 cents. While investors should note that the company has not missed estimates in the past 19 quarters, Transocean reported an adjusted loss per share in the quarter under review, which compares unfavorably with adjusted earnings of 63 cents a share in the prior-year quarter. Lower revenues and higher costs led to weaker results.
Total quarterly revenues of $629 million were down 35.4% year over year on lower dayrates and lower revenue efficiency. The top line also missed the Zacks Consensus Estimate of $634 million. Contract drilling revenues in the quarter declined 25.7% to $589 million from the year-ago $793 million. Transocean’s high-specification floaters contributed about 86.4% to total contract drilling revenues, while deepwater floaters, midwater floaters, high-specification jackups and others accounted for the remainder.
Revenue efficiency in the quarter reduced to 92.4%, compared with 100.3% and 97.1% in the year-ago quarter and prior quarter, respectively.
Costs
Transocean’s operating and maintenance expenses rose 23.9% to $389 million year over year. The costs also increased from the prior-quarter figure of $323 million. The operational inefficiency and lost revenues resulted the company’s cash flow from operating activities to plunge 59.4% year over year. In the fourth quarter of 2017, cash flow from operating activities stood at $257 against $633 million and $384 million recorded in the fourth quarter of 2016 and third quarter of 2017, respectively.
Dayrates and Utilization
Compared with the fourth quarter of 2016, dayrates fell almost 10% (from $329,400 to $269,700), unfavorably impacted by declines in all types of rigs barring high-specification jackups.
However, the overall fleet utilization was 53% during the quarter, up from the year-ago utilization rate of 46%.
Capital Expenditure & Balance Sheet
Transocean spent $111 million on capital expenditures in the fourth quarter of 2017 versus $272 million recorded in the year-ago quarter. The capex was primarily allocated toward newbuild rigs namely Deepwater Poseidon and Deepwater Pontus.
As of Dec 31, 2017, Transocean had cash and cash equivalents of $2,519 million. Long-term debt of the company was $7,146 million with a debt-to-capitalization ratio of 36%.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimate flatlined during the past month. There has been one revision higher for the current quarter compared to one lower.
Transocean Ltd. Price and Consensus
Transocean Ltd. Price and Consensus | Transocean Ltd. Quote
VGM Scores
At this time, RIG has a poor Growth Score of F. Its Momentum is doing a bit better with a D. The stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for value based on our styles scores.
Outlook
RIG has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.