Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
NEW YORK (
) has been reiterated by TheStreet Ratings as a sell with a ratings score of D . The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, poor profit margins, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.
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Highlights from the ratings report include:
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Energy Equipment & Services industry. The net income has significantly decreased by 345.2% when compared to the same quarter one year ago, falling from $124.00 million to -$304.00 million.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Energy Equipment & Services industry and the overall market, TRANSOCEAN LTD's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for TRANSOCEAN LTD is currently extremely low, coming in at 8.50%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -11.80% is significantly below that of the industry average.
- The share price of TRANSOCEAN LTD has not done very well: it is down 5.52% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- TRANSOCEAN LTD has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, TRANSOCEAN LTD swung to a loss, reporting -$18.04 versus $2.85 in the prior year. This year, the market expects an improvement in earnings ($2.85 versus -$18.04).
Transocean Ltd. provides offshore contract drilling services for oil and gas wells worldwide. It offers deepwater and harsh environment drilling, oil and gas drilling management, and drilling engineering and drilling project management services. Transocean has a market cap of $17.57 billion and is part of the basic materials sector and energy industry. The company has a P/E ratio of -2.4, below the S&P 500 P/E ratio of 17.7. Shares are up 27.4% year to date as of the close of trading on Tuesday.
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--Written by a member of TheStreet Ratings Staff.
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