Why Transocean (RIG) Stock Is Up This Morning

NEW YORK (TheStreet) -- Shares of Transocean Ltd.  (RIG) are up 1.41% to $43.15 as the offshore contract driller will begin trading ex-dividend tomorrow.

A cash dividend payment of 75 cents per share is scheduled to be paid on June 18, 2014. Shareholders who purchased RIG stock prior to the ex-dividend date are eligible for the cash dividend payment, according to NASDAQ.com News.

This represents an 33.93% increase over the prior quarter. 

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TheStreet Ratings team rates TRANSOCEAN LTD as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate TRANSOCEAN LTD (RIG) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and revenue growth. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • TRANSOCEAN LTD has improved earnings per share by 42.7% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, TRANSOCEAN LTD increased its bottom line by earning $3.87 versus $2.24 in the prior year. This year, the market expects an improvement in earnings ($4.28 versus $3.87).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Energy Equipment & Services industry average. The net income increased by 42.0% when compared to the same quarter one year prior, rising from $321.00 million to $456.00 million.
  • Net operating cash flow has increased to $136.00 million or 28.30% when compared to the same quarter last year. Despite an increase in cash flow, TRANSOCEAN LTD's cash flow growth rate is still lower than the industry average growth rate of 49.36%.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. In comparison to the other companies in the Energy Equipment & Services industry and the overall market, TRANSOCEAN LTD's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • RIG has underperformed the S&P 500 Index, declining 18.55% from its price level of one year ago. 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.
  • You can view the full analysis from the report here: RIG Ratings Report

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