Should Transocean Ltd. (RIG) be Part of a Diversified Investment?

Analysts at Johnson Rice upped their rating on shares of Transocean Ltd. (NYSE:RIG) from Sell to Hold in their opinion released on October 17. RBC Capital Mkts analysts bumped their recommendation on RIG stock from Sector Perform to Outperform in a separate flash note to investors on September 20. Analysts at Wells Fargo issued an upgrade from Market Perform to Outperform for the stock, in a research note that dated back to September 19.

By watching the trading activity of corporate insiders, it will become easier to get a sense of Transocean Ltd. (NYSE:RIG)’s prospects. The earliest insider trade took place on 10/09/2018. Tonnel David A parted with a total of 1.35 thousand shares of company at average share price of $14.4. The total for the sales was set at $19.44 thousand. After this transaction, the SVP and Corporate Controller account balance stood at 75.03 thousand shares. The stock lost -35.28 percent since that insider sale. On 08/16/2018, Intrieri Vincent J, Director, purchased 10 thousand shares at a price per share of $10.62. This added 106.2 thousand shares to the insider’s fortune and the stock saw a -12.24 percent retreat in value since the news became public. This transaction left 10 thousand shares in the Director account. On 05/17/2018, SVP and Corporate Controller Tonnel David A performed a sale transaction worth $102.71 thousand. This sale at $13.8 each has eliminated 7.44 thousand shares from the insider’s portfolio position. Meanwhile, shares have recorded -32.46 percent decrease since the transaction was reported. The insider now is left with 76.38 thousand shares remaining in the account. Mohn Frederik Wilhelm, who performs the Director, 10% Owner job, bought 2 million shares for $18.58 million. The acquisition occurred on 03/02/2018 was priced at $9.29 per share. The share price soared 0.32 percent since the reporting date. Mohn Frederik Wilhelm now left with a stake of 33.1 million RIG stock worth $308.46 million after the insider buying.

Transocean Ltd. (RIG) is expected to jump by 56.01 percent over the next 12 months, according to price target estimates compiled by finviz. Meanwhile, they have set a $30-month high price target. This represents a whopping 221.89 percent increase from where shares are trading today. The 12-month median price target assigned by the analysts stands at $14.3, which represents a return potential of 53.43 percent when compared to the closing price of the stock of $9.32 on Tuesday, December 04. The lowest price target for the stock is $8 — slightly more than -14.16 percent from RIG’s current share price.

The shares are currently floating around the first support level of $9.08. Below this, the next support is placed in the zone of $8.85. Till the time, the RIG stock trades above this level, bulls have nothing to fear. On momentum oscillators front, ‘RSI’ has touched 39.92 on daily chart, which may remain a cause for comfort. If the price breaks below $8.85 level on closing basis, then we may see more profit booking and the stock may show further weakness. On the flipside, hitting the $9.79 mark may result into a pull-back move towards $10.27 level.

RIG shares dropped -0.6 points or -6.05 percent on Tuesday to $9.32 with a light trade volume of 14.748 million shares. After opening the session at $9.89, the shares went as high as $10.03 and as low as $9.32, the range within which the stock’s price traded throughout the day. The firm is left with a market cap of $4.56 billion and now has 488.78 million shares outstanding. Transocean Ltd. (RIG) stock has lost -14.42 percent of market value in 21 trading days.

RIG stock has a trailing 3-year beta of 1.53, offering the possibility of a higher rate of return, but also posing more risk. The portion of a company’s profit allocated to each outstanding share of common stock was -$3.75 a share in the trailing twelve months. The stock’s value has fallen -12.73 percent year to date (YTD) against a decline of -11.99 percent in 12 month’s time. The company’s shares still trade -35.59 percent away from its 1-year high of $14.47 and 7.13 percent up from 52-week low of $8.70. The average consensus rating on the company is 2.4, on a scale where 5 equates to a unanimous sell rating. In short, the mean analyst recommendations are calling this stock a sell.

Shares of Transocean Ltd. (RIG) are trading at a P/E ratio of 0 times earnings reported for the past 12 months. The industry RIG operates in has an average P/E of 229.97. Its P/E ratio went as low as 5.26X and as high as 12.84 over the 5-year span. Further, it is sporting a 1.57 on the Price-to-Sales ratio. Compare this with the industry average P/S of 5.99. 41.7 percent is the gross profit margin for Transocean Ltd. and operating margin sits at -42.2 percent. Along with this, the net profit margin is -64.3 percent.

RIG will be showing off its Q4 earnings on February 27. Analysts are forecasting revenue to climb 21.2 percent to $732M in the next fiscal quarter, while earnings are seen soaring by nearly 0 percent to -$0.24 per share. History has shown that shares in Transocean Ltd. have gone down on 19 different earnings reaction days and are predicted to add 0.03 percent when the company reports upcoming earnings. In last reported earnings results, it earned $0.06 per share, better than the -$0.1, adjusted, expected by Thomson Reuters consensus estimate. Revenue was $816M, better than the $778M analysts expected. Earnings are estimated to increase by -476.1 percent this year, 13.2 percent next year and continue to increase by 0 percent annually for the next 5 years.