NEW YORK (TheStreet) -- Shares of Transocean (RIG - Get Report) were rising in mid-morning trading today after the Swiss offshore drilling services company reported higher second quarter earnings and revenue than analysts estimated.
After yesterday's closing bell, Transocean posted earnings of 17 cents per share, beating analysts expectations of no earnings. Revenue came in at $943 million, which surpassed the $920.73 million analysts estimated.
Cash flows fell to $207 million from $631 million in 2015 due primarily to contract termination fees, the company said.
In 2015, Transocean reported earnings of $1.11 per share on revenue of $1.88 billion for the second quarter.
Citigroup analysts noted the company's strong second quarter but maintained its "sell" rating on the stock, citing valuation.
"The question going forward is how much lower can costs be lowered through the downcycle," Citigroup said in an analyst note according to Barron's. "However, while the company continues to make improvements in operating efficiency, our modeling points to valuation downside given its large exposure to fifth gen assets that are likely to remain indefinitely mothballed."
While Transocean's peers matched their cost cutting estimates, Citigroup said Transocean beat its projections, likely resulting in higher stock growth in the near term.
Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate TRANSOCEAN LTD as a Hold with a ratings score of C-. 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 compelling growth in net income, largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.
You can view the full analysis from the report here: RIG