Analyzing Transocean Partners (RIGP) and Rowan Companies (RDC)

Transocean Partners (NYSE: RIGP) and Rowan Companies (NYSE:RDC) are both 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.

Institutional and Insider Ownership

29.0% of Transocean Partners shares are owned by institutional investors. 0.1% of Transocean Partners shares are owned by insiders. Comparatively, 0.8% of Rowan Companies shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Analyst Recommendations

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

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Transocean Partners 0 0 0 0 N/A
Rowan Companies 2 12 4 0 2.11

Rowan Companies has a consensus target price of $16.29, suggesting a potential downside of 4.76%. Given Rowan Companies’ higher possible upside, analysts plainly believe Rowan Companies is more favorable than Transocean Partners.

Profitability

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

Net Margins Return on Equity Return on Assets
Transocean Partners 53.12% 13.03% 15.28%
Rowan Companies -4.76% -0.61% -0.38%

Valuation & Earnings

This table compares Transocean Partners and Rowan Companies’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Transocean Partners N/A N/A N/A $2.41 7.40
Rowan Companies $1.84 billion 1.17 $320.60 million ($0.51) -33.53

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

Dividends

Transocean Partners pays an annual dividend of $1.45 per share and has a dividend yield of 8.1%. Rowan Companies does not pay a dividend. Transocean Partners pays out 60.2% of its earnings in the form of a dividend. Transocean Partners has raised its dividend for 3 consecutive years and Rowan Companies has raised its dividend for 3 consecutive years.

Summary

Transocean Partners beats Rowan Companies on 7 of the 12 factors compared between the two stocks.

Transocean Partners Company Profile

Transocean Partners LLC a limited liability company. The Company is formed by Transocean Partners Holdings Limited and a subsidiary of Transocean Ltd. (Transocean), to own, operate and acquire advanced offshore drilling rigs. The Company’s assets consist of over 50% ownership interest in each of the entities that owns and operates over three ultra-deepwater drilling rigs that are operating in the U.S. Gulf of Mexico, which include Discoverer Clear Leader, Discoverer Inspiration and Development Driller III. The Company owns or has partial ownership interests in, and operated over 60 mobile offshore drilling units, including approximately 30 ultra-deepwater floaters, over seven harsh environment floaters, approximately five deepwater floaters, over 10 midwater floaters and approximately 10 high-specification jackups. Transocean also has approximately six ultra-deepwater drillships and over five high-specification jackups under construction.

Rowan Companies 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.

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