Rowan Companies PLC (NYSE: RDC) and Transocean (NYSE:RIG) are both oils/energy companies, but which is the better stock? We will contrast the two businesses based on the strength of their earnings, dividends, profitability, analyst recommendations, institutional ownership, risk and valuation.

Volatility and Risk

Rowan Companies PLC has a beta of 1.8, suggesting that its share price is 80% more volatile than the S&P 500. Comparatively, Transocean has a beta of 1.67, suggesting that its share price is 67% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and target prices for Rowan Companies PLC and Transocean, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Rowan Companies PLC 2 14 6 0 2.18
Transocean 9 13 11 0 2.06

Rowan Companies PLC currently has a consensus target price of $16.40, suggesting a potential upside of 64.47%. Transocean has a consensus target price of $12.23, suggesting a potential upside of 44.44%. Given Rowan Companies PLC’s stronger consensus rating and higher possible upside, analysts plainly believe Rowan Companies PLC is more favorable than Transocean.

Insider & Institutional Ownership

67.8% of Transocean shares are owned by institutional investors. 0.8% of Rowan Companies PLC shares are owned by company insiders. Comparatively, 0.3% of Transocean shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Valuation and Earnings

This table compares Rowan Companies PLC and Transocean’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Rowan Companies PLC $1.43 billion 0.88 $627.20 million ($0.31) -32.16
Transocean $3.42 billion 0.97 $1.83 billion ($2.87) -2.95

Transocean has higher revenue and earnings than Rowan Companies PLC. Rowan Companies PLC is trading at a lower price-to-earnings ratio than Transocean, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Rowan Companies PLC and Transocean’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Rowan Companies PLC -2.62% 0.51% 0.31%
Transocean -33.52% 2.20% 1.30%

Summary

Transocean beats Rowan Companies PLC on 7 of the 13 factors compared between the two stocks.

Rowan Companies PLC Company Profile

Rowan Companies plc is a provider of offshore contract drilling services to the international oil and gas industry. The Company operates through two segments: deepwater and jack-ups. Its deepwater segment consists of drillship operations. As of December 31, 2016, the Company’s fleet consisted of 29 mobile offshore drilling units, including 25 self-elevating jack-up rigs and four ultra-deepwater drillships. The Company’s fleet operates across the world, including the United States Gulf of Mexico (US GOM), the United Kingdom and Norwegian sectors of the North Sea, the Middle East and Trinidad. As of February 14, 2017, the Company’s drilling fleet consisted of four ultra-deepwater drillships; 19 high-specification cantilever jack-up rigs, and six premium cantilever jack-up rigs. Its jack-ups are capable of drilling wells to maximum depths ranging from 25,000 to 40,000 feet and in maximum water depths ranging from 300 to 550 feet, depending on rig size, location and outfitting.

Transocean Company Profile

Transocean Ltd. is an international provider of offshore contract drilling services for oil and gas wells. The Company’s primary business is to contract its drilling rigs, related equipment and work crews on a dayrate basis to drill oil and gas wells. As of February 9, 2017, it owned or had partial ownership interests in and operated 56 mobile offshore drilling units. As of February 9, 2017, its fleet consisted of 30 floaters, seven harsh environment floaters, three deepwater floaters, and six midwater floaters. Its contract drilling services operations are spread across oil and gas exploration and development areas throughout the world.

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