Transocean Ltd. (NYSE:RIG) is scheduled to report Q3 earnings results after markets close for trading on November 2, 2020.
The company is expected to report earnings of -$0.12/share on revenue of $770 million. The consensus earnings per share (EPS) of -$0.12/share is based on a poll of 18 analysts and represents a growth in eps of 68.7% over the same quarter last year, when the company reported earnings of -$0.38/share.
The revenue forecast of $770 million based on a poll of 10 analysts implies a year-over-year (YoY) decline in revenue of −1.8%. Last year the company reported $784 million in revenue for the quarter.
| Metric | Expected | Prior Year | YoY Change |
|---|---|---|---|
| Revenue | $769.98 | $784.00 | −1.8% |
| EPS | -$0.12 | -$0.38 | −68.7% |
Earnings Call Trends
Historically, management has exceeded analyst expectations 3 out of the last 8 tracked quarters, missed 4 quarters, and met expectations 4 quarters.
What are your expectations from Transocean Ltd. for earnings this quarter? Let us know in the comments!
| Quarter | Expected | Reported | Surprise | Result |
|---|---|---|---|---|
| Q2, 2020 | -$0.28 | -$0 | 99.4% | Beat |
| Q1, 2020 | -$0.28 | -$0.30 | -5.8% | Missed |
| Q4, 2019 | -$0.30 | -$0.43 | -44.7% | Missed |
| Q3, 2019 | -$0.36 | -$0.38 | -4.4% | Missed |
| Q2, 2019 | -$0.34 | -$0.34 | 0% | Met |
| Q1, 2019 | -$0.32 | -$0.30 | 5.5% | Beat |
| Q4, 2018 | -$0.24 | -$0.34 | -43.8% | Missed |
| Q3, 2018 | -$0.10 | $0.06 | 161.4% | Beat |
In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by increasing 2.0%.
| Report Date | Price Day Prior | Price Next Day | Change % | Result |
|---|---|---|---|---|
| July 29, 2020 | $2.04 | $2.08 | 2.0% | Increase |
| April 29, 2020 | $0.94 | $1.28 | 36.8% | Increase |
| February 17, 2020 | $4.52 | $4.41 | −2.4% | Decline |
| October 28, 2019 | $4.70 | $5.11 | 8.7% | Increase |
The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.85, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.85 implies a 0.2% chance of earnings manipulation.
Fundamentals And Technical Analysis
Transocean Ltd. is currently trading at $0.81/share, down −3.9% for the day. The company is trading at approximately 11.1% of its 52-week high of $7.28/share. The company’s stock price is down −61.2% since the last earnings report and down −1.9% over the previous week.
The company’s 14 Day Relative Price Index (RSI) of 42.71 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.
The current share price implies a price-to-earnings (P/E) multiple of −0.30 and a forward P/E multiple of −1.15.
Transocean Ltd.’s current share price also implies a price-to-book (P/B) multiple of 0.05. The following table summarizes some other key fundamental ratios:
| Metric | Value |
|---|---|
| Last Reported Fiscal Period Key | FY2020.Q2 |
| Period End Date | June 30, 2020 |
| Stock Price (Current) | $0.81 |
| P/E Ratio | −0.3x |
| P/E Ratio (Fwd) | −1.1x |
| PEG Ratio | 0.0 |
| Total Debt / Total Capital | 94.3% |
| Levered Free Cash Flow | -$125 million |
| EV / EBITDA | 7.2x |
Transocean Ltd. is a small-cap stock with a market capitalization of $522.3 million and a total enterprise value of $8.075 billion. The company operates in the Energy sector and the Energy Equipment & Services industry.
Transocean Ltd., together with its subsidiaries, provides offshore contract drilling services for oil and gas wells worldwide. The company primarily offers drilling rigs, related equipment, and work crews; and ultra-deepwater and harsh environment drilling services. As of February 12, 2020, it owned or had partial ownership interests in and operated a fleet of 45 mobile offshore drilling units that consist of 28 ultra-deepwater floaters, 14 harsh environment floaters, and 3 midwater floaters. The company serves integrated oil companies or their affiliates, as well as government-controlled oil companies and independent oil companies. Transocean Ltd. is based in Steinhausen, Switzerland.
