Transocean (NYSE: RIG) and Seadrill Limited (NYSE:SDRL) are both oils/energy companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, valuation, risk, earnings, dividends, profitabiliy and analyst recommendations.

Institutional and Insider Ownership

68.2% of Transocean shares are owned by institutional investors. Comparatively, 28.7% of Seadrill Limited shares are owned by institutional investors. 0.3% of Transocean shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Valuation & Earnings

This table compares Transocean and Seadrill Limited’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Transocean $3.61 billion 0.88 $1.84 billion $1.66 4.91
Seadrill Limited $2.65 billion 0.07 $1.44 billion ($0.38) -0.96

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

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Transocean and Seadrill Limited, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Transocean 15 12 9 0 1.83
Seadrill Limited 2 0 0 0 1.00

Transocean presently has a consensus price target of $12.88, indicating a potential upside of 58.02%. Given Transocean’s stronger consensus rating and higher possible upside, equities research analysts plainly believe Transocean is more favorable than Seadrill Limited.

Risk & Volatility

Transocean has a beta of 1.7, suggesting that its share price is 70% more volatile than the S&P 500. Comparatively, Seadrill Limited has a beta of 2.66, suggesting that its share price is 166% more volatile than the S&P 500.

Profitability

This table compares Transocean and Seadrill Limited’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Transocean 17.28% 2.57% 1.51%
Seadrill Limited -6.99% 5.67% 2.59%

Summary

Transocean beats Seadrill Limited on 11 of the 14 factors compared between the two stocks.

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, six midwater floaters and 10 high-specification jackups. As February 9, 2017, it also had four ultra-deepwater drillships and five high-specification jackups under construction or under contract to be constructed. Its contract drilling services operations are spread across oil and gas exploration and development areas throughout the world. The Company’s drilling fleet can be characterized as floaters, including drillships and semisubmersibles, and jackups.

Seadrill Limited Company Profile

Seadrill Limited is an offshore drilling contractor providing offshore drilling services to the oil and gas industry. The Company’s primary business is the ownership and operation of drillships, semi-submersible rigs and jack-up rigs for operations in shallow-, mid-, deep-, and ultra deepwater areas, and in benign and harsh environments. The Company’s segments are Floaters and Jack-ups. The Company offers services encompassing drilling, completion and maintenance of offshore exploration and production wells. The Company contracts its drilling units primarily on a dayrate basis to drill wells for its customers. The Company has a fleet of approximately 38 offshore drilling units consisting of over 12 semi-submersible rigs, approximately seven drillships and over 19 jack-up rigs in operation, and contracts for the construction of approximately 13 offshore drilling units. The Company also provides management services to certain unconsolidated companies in which its holds investments.

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