Today's Pre-Market Laggard Is Transocean (RIG)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Transocean ( RIG) as a pre-market laggard candidate. In addition to specific proprietary factors, Trade-Ideas identified Transocean as such a stock due to the following factors:

  • RIG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $268.3 million.
  • RIG traded 60,934 shares today in the pre-market hours as of 7:31 AM.
  • RIG is down 2.6% today from yesterday's close.

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More details on RIG:

Transocean Ltd., together with its subsidiaries, provides offshore contract drilling services for oil and gas wells worldwide. The company provides deepwater and harsh environment drilling, oil and gas drilling management, and drilling engineering and drilling project management services. The stock currently has a dividend yield of 11.6%. Currently there are no analysts that rate Transocean a buy, 4 analysts rate it a sell, and 12 rate it a hold.

The average volume for Transocean has been 10.7 million shares per day over the past 30 days. Transocean has a market cap of $9.4 billion and is part of the basic materials sector and energy industry. The stock has a beta of 2.54 and a short float of 22.6% with 7.53 days to cover. Shares are down 48.2% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Transocean as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity and generally disappointing historical performance in the stock itself.

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 506.0% when compared to the same quarter one year ago, falling from $546.00 million to -$2,217.00 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.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 52.69%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 513.51% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • RIG, with its decline in revenue, underperformed when compared the industry average of 16.0%. Since the same quarter one year prior, revenues slightly dropped by 7.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • RIG's debt-to-equity ratio of 0.71 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.42 is sturdy.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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