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Transocean Ltd. RIG is set to release second-quarter 2021 results after the closing bell on Aug 2. The current Zacks Consensus Estimate for the to-be-reported quarter is a loss of 15 cents per share on revenues of $677.70 million.
Let’s delve into the factors that might have influenced the offshore driller’s performance in the June quarter. But it’s worth taking a look at Transocean’s previous-quarter performance first.
Highlights of Q1 Earnings & Surprise History
In the last-reported quarter, the Switzerland-based rig supplier had missed the consensus mark due to lower utilization. Transocean had reported adjusted net loss per share of 19 cents that was wider than the Zacks Consensus Estimate of 16 cents loss. The company’s quarterly revenues of $653 million had surpassed the Zacks Consensus Estimate by 2.18% though, primarily driven by impressive revenue efficiency and higher dayrates.
As far as earnings surprises are concerned, Transocean beat the Zacks Consensus Estimate in two of the last four quarters and missed in the others, delivering an earnings surprise of 1.01%, on average. This is depicted in the graph below:
Transocean Ltd. Price and EPS Surprise
Transocean Ltd. price-eps-surprise | Transocean Ltd. Quote
Trend in Estimate Revision
The Zacks Consensus Estimate for the second-quarter bottom line remained the same in the last seven days. The estimated figure compares with breakeven earnings in the year-ago period. The Zacks Consensus Estimate for revenues, meanwhile, suggests a 27.13% decrease from the corresponding quarter of 2020.
Factors to Consider
The company anticipates second-quarter adjusted contract drilling revenues of roughly $675 million, 31.3% below the year-ago figure of $983 million. While this is expected to have impacted Transocean’s cash flows, it also points to the conclusion of contract for Dhirubhai Deepwater KG2 drillship in April.
On a bullish note, the company forecasts revenue efficiency to average an impressive 95% in the to-be-reported quarter. This is an indication of minimal loss of revenues due to downtime and Transocean’s superior efficiency in translating its industry-leading backlog of $7.3 billion into cash.
What Does Our Model Say?
The proven Zacks model does not conclusively show that Transocean is likely to beat estimates in the second quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. But that’s not the case here.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, for this company is -3.90%.
Zacks Rank: Transocean currently carries a Zacks Rank #4 (Sell).
Stocks to Consider
While an earnings beat looks uncertain for Transocean, here are some firms from the energy space that you may want to consider on the basis of our model:
APA Corporation APA has an Earnings ESP of +7.02% and a Zacks Rank #1. The firm is scheduled to release earnings on Aug 4.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Continental Resources, Inc. CLR has an Earnings ESP of +4.62% and is Zacks #1 Ranked. The firm is scheduled to release earnings on Aug 2.
Devon Energy Corporation DVN has an Earnings ESP of +0.19% and a Zacks Rank #1. The firm is scheduled to release earnings on Aug 3.
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Devon Energy Corporation (DVN) : Free Stock Analysis Report
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