RIG Investment Analysis Report & Stock Research, Transocean Ltd.

Transocean Ltd. (RIG)

RIG Stock Report

2-Year Price History

View Larger RIG Chart
NYSE:RIG
$84.65
(2/9 11:28AM)
+1.5%
Open$84.75 Mkt Cap$26.8 Billion
High$85.68 52Wk High$94.88
Low$83.53 52Wk Low$49.20
Volume1.6 Million Avg Vol 10D5.0 Million

Ockham's Rating/Recommendation Summary

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RIG Revenue

Cash earnings is the most important factor in our analysis, but it goes without saying that if a company cannot produce sales then there is no ability to generate cash flow. By that logic we look very closely at revenue numbers as our second most important factor in valuing a company's stock. We have established reasonable Price to Sales per share ranges based on historical data of the last 10 years. For, RIG the high and low end of the Price to Sales per share ratios are 5.16x and 2.67x respectively.

Notice that RIG's current Price to Sales per share ratio is 2.23x, which is quite a bit below what we consider a normal Price to Sales ratio for this stock. Given normal conditions and a price of $83.99, RIG is 44% below where we would expect to see it. This will beneficially factor into our final analysis of RIG as it is not often that this stock sinks to these levels.

RIG Cash Earnings

Cash Earnings is always one of the most important factors to review for a company and, more importantly, an investment in a stock. RIG is significantly below their historical average multiples of Cash Earnings, as calculated by our proprietary analysis. It is incredibly important to understand that for RIG, the current level of Cash Earnings compared to its historical levels helps identify where RIG is in relation to what the investing community was willing to pay for this level of Cash Earnings in the past. With a historical high Cash Earnings per share ratio of 13.61 and a historical low Cash Earnings per share ratio of 7.12, an investor can relate where value becomes optimal.

So what does "significantly below" mean when we talk about Price to Cash Earnings numbers for RIG? From the Ockham perspective, we are looking specifically at RIG to see if the market is recognizing the huge disparity between RIG's past stock price to Cash Earnings ratio to today's levels. At a difference of 43% below the average historical Price to Cash Earnings ratio, our view would be quite positive at this point. However, as with all metrics, we need to also take other factors into account when looking at RIG. While we view better Cash Earnings metrics as very important, if the market is slow to identify this value, or if Cash Earnings were to fall from these levels, we would become more neutral in our stance.

RIG Dividends

When determining a company's future prospects for success, Ockham Research sees analysis of dividend payments as a key additional factor. Even though it isn't imperative for RIG to shell out a dividend in order to receive a positive rating, it can be helpful to further our analysis.

Peer Comparison

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Transocean Ltd. Industry Grouping

(2/8/2010)
Company Ticker Market Cap (Ml) Latest
Price
Price/Cash Earnings Price/Sales 5-Yr. Rev.
Growth Rate
5-Yr.
Avg. ROE.
Current 10-Yr. Range* Current 10-Yr. Range*
Peer Company Averages (not including RIG) 8.93 3.42 » 15.11 1.56 0.65 » 6.29 17.10% 26.08%
*10 year range does not include current year values
Imperial Oil Limited IMO $29.9 Billion $35.22 14.08 5.37 » 16.98 1.66 0.69 » 18.85 11.66% 39.16%
Transocean Ltd. RIG $26.8 Billion $83.40 5.96 2.70 » 21.20 2.23 1.03 » 7.97 39.09% 16.34%
Repsol YPF SA REP $26.7 Billion $21.90 3.24 2.10 » 6.66 0.32 0.23 » 0.73 12.62% 16.36%
XTO Energy, Inc. XTO $26.1 Billion $44.97 5.38 2.97 » 11.57 3.01 1.44 » 5.55 45.27% 22.18%
Halliburton Company HAL $25.3 Billion $28.10 10.21 3.54 » 18.07 1.74 0.31 » 2.72 2.39% 28.51%
Sasol LTD ADR SSL $23.4 Billion $35.19 11.73 3.13 » 22.26 1.09 0.59 » 3.61 13.55% 24.18%
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2:40P, Feb. 08,2010 RIG $84.02 Transocean Ltd.
Fox Business

Transocean Ltd. Dividend News from Fox Business

For income investors, dividend news is obviously important. RIG's dividends were discussed recently on Fox Business.

When taking into account the amount of news coverage each stock normally sees as a percentage of the total, Transocean Ltd. has actually sunk a bit in comparison to the others. At present, Ockham has a valuation stance of Undervalued on RIG, as we could see significant price appreciation based on current fundamentals like cash earnings and revenue. Crowd sentiment is favorable on this stock, as measured by the Motley Fool CAPS survey.

“… Bank of america such as TRANSOCEAN and. Why? Directory like big banks in general and thinkpad bad news is priced in at the present time and the yield curve such as it is and ... …”

6:23P, Feb. 02,2010 RIG $89.13 Transocean Ltd.
Mad Money

Discussion Turns to RIG and Merger Talk on Mad Money

While we do not know the details relating to RIG and any possible deal, our RazorWire news analytics has noticed a mention of the stock near a conversation about M&A activity.

Crowd sentiment is favorable on this stock, as measured by the Motley Fool CAPS survey. When taking into account the amount of news coverage each stock normally sees as a percentage of the total, Transocean Ltd. has actually sunk a bit in comparison to the others. At present, Ockham has a valuation stance of Undervalued on RIG, as we could see significant price appreciation based on current fundamentals like cash earnings and revenue.

“… It's a ratio with both global santa fe soon taken over by TRANSOCEAN and by kbr short ily before a runoff of a 14 base. Both of those had a lower backlog to market cap ratio ... …”

10:51A, Jan. 29,2010 RIG $87.18 Transocean Ltd.
Squawk On The Street

Transocean Ltd. Was Talked About by Squawk On The Street

As always, the latest news on RIG is available to Ockham clients through RazorWire, and it was mentioned recently on Squawk On The Street.

Based on our methodology, Transocean Ltd. should hold some appeal to value investors as we view it as Undervalued. Crowd sentiment is leaning to the bearish side, according to the robust data set collected by the Motley Fool CAPS survey. We noticed recently that in comparison to all other stocks we analyze in the news; RIG has received less coverage from the financial media in business television and blogs.

“… they've seen idle time last year. We're looking at symbol ne and TRANSOCEAN rig. >> what happens if global growth is hit? …”

5:57P, Jan. 27,2010 RIG $87.34 Transocean Ltd.
Fast Money

Earnings Discussion for Transocean Ltd. on Fast Money

Earnings or profits are the most key fundamental factor that an investor to be aware of for any stock. We noticed Fast Money discussed earnings on RIG.

We noticed recently that in comparison to all other stocks we analyze in the news; RIG has received less coverage from the financial media in business television and blogs. Crowd sentiment is leaning to the bearish side, according to the robust data set collected by the Motley Fool CAPS survey. Based on our methodology, Transocean Ltd. should hold some appeal to value investors as we view it as Undervalued.

“… TRANSOCEAN. Rigs. > > got to go with amgen. This son of a gun's going higher. > > thanks for watching. Tune in tomorrow and we're all over the after-hours action, ... …”

3:37P, Jan. 25,2010 RIG $87.67 Transocean Ltd.
Closing Bell

RIG's Valuation a Topic on Closing Bell

Closing Bell mentions some valuation metrics in regards to RIG; have a read at what they think from Ockham's RazorWire.

The Motley Fool CAPS data suggests that investors believe Transocean Ltd. will beat the market in the foreseeable future. As we analyze the results from RazorWire, one thing we do is rank each stock in terms of amount of news coverage. Recently, RIG has been less covered in the news compared to the rest of our universe of stocks. We consider RIG as Undervalued at the current price of $86.83. According to our methodology, this stock has appreciation potential based on current fundamentals which only improves if earnings or revenue surprise.

“… cyclical is TRANSOCEAN, symbol rig. Trading at about 8 1/2 times forward earnings. It's an $87 stock, pulled back to close $100 a few months ago. …”

6:53P, Dec. 16,2009 RIG $84.17 Transocean Ltd.
Mad Money

Interested in RIG? See What the Pundits Said on Mad Money

News has broken via the television and viral blogs regarding RIG, so investors should take an interest in learning what was said.

Crowd sentiment is favorable on this stock, as measured by the Motley Fool CAPS survey. At present, Ockham has a valuation stance of Undervalued on RIG, as we could see significant price appreciation based on current fundamentals like cash earnings and revenue. When taking into account the amount of news coverage each stock normally sees as a percentage of the total, Transocean Limited has actually sunk a bit in comparison to the others.

“… caller: TRANSOCEAN and > > this is interesting because there are some possibilities I could find a double here. Pepsico, what can I say? …”

12:54P, Dec. 10,2009 RIG $80.10 Transocean Ltd.
Power Lunch

Interested in RIG? See What the Pundits Said on Power Lunch

The latest news from business television and influential blogs is always available through Ockham's RazorWire, and this news is in relation to Transocean Limited.

When looking at our entire coverage universe and ranking stocks by the attention they receive on RazorWire, it is clear that Transocean Limited has been talked about more than normal recently. We consider RIG as Undervalued at the current price of $80.10. According to our methodology, this stock has appreciation potential based on current fundamentals which only improves if earnings or revenue surprise. The Motley Fool CAPS data suggests that investors believe Transocean Limited will beat the market in the foreseeable future.

“… TRANSOCEAN diamond offshofr, broken trend line support, i'd stay away. > > we're going to take a pause tonight, we check in with the charts and give you the best plays for the ... …”

6:34P, Nov. 25,2009 RIG $86.36 Transocean Ltd.
Mad Money

Holding RIG Stock? See What Is Being Discussed on Mad Money

The latest news from business television and influential blogs is always available through Ockham's RazorWire, and this news is in relation to Transocean Limited.

When looking at our entire coverage universe and ranking stocks by the attention they receive on RazorWire, it is clear that Transocean Limited has been talked about more than normal recently. The Motley Fool CAPS data suggests that investors believe Transocean Limited will beat the market in the foreseeable future. We consider RIG as Undervalued at the current price of $86.36. According to our methodology, this stock has appreciation potential based on current fundamentals which only improves if earnings or revenue surprise.

“… The king of oil service and TRANSOCEAN, the largest offshore driller. They were the first to pop their heads out of the trenches. …”

2:11P, Nov. 16,2009 RIG $90.20 Transocean Ltd.
Fox Business

Transocean Limited Dividend News from Fox Business

If RIG's dividends are important to you, take a look at the news as they were the topic of conversation on Fox Business.

As we analyze the results from RazorWire, one thing we do is rank each stock in terms of amount of news coverage. Recently, RIG has been less covered in the news compared to the rest of our universe of stocks. We consider RIG as Undervalued at the current price of $89.75. According to our methodology, this stock has appreciation potential based on current fundamentals which only improves if earnings or revenue surprise. The Motley Fool CAPS data suggests that investors believe Transocean Limited will beat the market in the foreseeable future.

“… TRANSOCEAN. In the sweet space of deep water drilling. Big integrated oil companies, national oil companies. As the global economy recovers we think they'll prosper as well bec... …”

7:33A, Nov. 11,2009 RIG $88.48 Transocean Ltd.
Squawk Box

Transocean Ltd. (RIG) Discussed on CNBC's Squawk Box

Transocean Ltd. is in the news. Find out how this impacts RIG trading on Ockham Research.

Mcdonald's 14 times, merck 10 times, pepsi, 15 times. Wellpoint, 8 times. TRANSOCEAN, offshore, eight there's plenty of value in the I think that I have no trouble finding value. The only trouble I have is hoich exposure I want to take on. There are risks along the way. We have a president that is advocating a program, social program that I don't relate to. I think be we're looking at marginal tax rates that are going up. Personally I think we're heading toward a vat tax, when they wake up and figure it out, you cannot tax the wealthy enough to close the deficit. The question is timing.

“… along the way. We have a president that is advocating a program, social program that I don't relate to. I think be we're looking at marginal tax rates that are going up. Personally I think we're heading toward a vat tax, when they wake up and figure it out, you cannot tax the wealthy enough to close the deficit. The question is timing. …”

View All Transocean Ltd. Stock News

Key Fundamentals

RIG - Transocean Ltd. Fundamentals
Price (2/9 11:28AM) $84.65
Volume (2/9 11:28AM) 1.6 Million
Last Close Price $83.40
10 Day Average Volume 5.0 Million
13 Week Price Range $78.71 - $94.88
52 Week Price Range $49.20 - $94.88
LTM Revenue $12.1 Billion
 
Shares Outstanding (12/2008) 321.1 Million
Market Capitalization $26.8 Billion
Shares Held By Institutions 249.7 Million
Institutional Holders 1,161
% Shares Held By Institutions 77.80%
Earnings Per Share (EPS) $13.09
P/E Ratio 8.20
Book Value Per Share $61.36
 
Gross Margin 54.80%
Annual Dividend 0.00
Dividend Yield 0.00%
Beta 0.78
Fiscal Year Ends December

About Transocean Ltd.

Transocean Ltd. is considered to operate in the Basic Materials sector. They specifically operate in the Oil & Gas Drilling/Exploring business segment contained within the Energy industry.

The Company is an international provider of offshore contract drilling services for oil and gas wells. Its two reportable segments are: contract drilling services and other operations.