Transocean Partners (NYSE: RIGP) and Nabors Industries (NYSE:NBR) are both energy companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, analyst recommendations, earnings, valuation, institutional ownership, risk and dividends.
Insider & Institutional Ownership
29.0% of Transocean Partners shares are held by institutional investors. Comparatively, 98.7% of Nabors Industries shares are held by institutional investors. 0.1% of Transocean Partners shares are held by insiders. Comparatively, 4.1% of Nabors Industries shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.
This is a summary of current recommendations and price targets for Transocean Partners and Nabors Industries, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Transocean Partners presently has a consensus target price of $18.00, suggesting a potential upside of 0.95%. Nabors Industries has a consensus target price of $14.15, suggesting a potential upside of 108.09%. Given Nabors Industries’ higher probable upside, analysts clearly believe Nabors Industries is more favorable than Transocean Partners.
Volatility and Risk
Transocean Partners has a beta of 1.68, suggesting that its share price is 68% more volatile than the S&P 500. Comparatively, Nabors Industries has a beta of 1.55, suggesting that its share price is 55% more volatile than the S&P 500.
This table compares Transocean Partners and Nabors Industries’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Valuation and Earnings
This table compares Transocean Partners and Nabors Industries’ gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Nabors Industries||$2.25 billion||0.86||$535.84 million||($2.55)||-2.67|
Nabors Industries has higher revenue and earnings than Transocean Partners. Nabors Industries is trading at a lower price-to-earnings ratio than Transocean Partners, indicating that it is currently the more affordable of the two stocks.
Transocean Partners pays an annual dividend of $1.45 per share and has a dividend yield of 8.1%. Nabors Industries pays an annual dividend of $0.24 per share and has a dividend yield of 3.5%. Transocean Partners pays out 70.0% of its earnings in the form of a dividend. Nabors Industries pays out -9.4% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Transocean Partners has increased its dividend for 2 consecutive years and Nabors Industries has increased its dividend for 3 consecutive years.
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.
Nabors Industries Company Profile
Nabors Industries Ltd. owns and operates a land-based drilling rig fleet. The Company is a provider of offshore platform drilling rigs in the United States and multiple international markets. The Company conducts its Drilling & Rig Services business through four segments: U.S. Drilling, Canada Drilling, International Drilling and Rig Services. The Company provides wellbore placement services, drilling software and performance tools, drilling equipment and various technologies throughout the oil and gas markets. The Company’s Drilling & Rig Services business comprises land-based and offshore drilling rig operations and other rig services, consisting of equipment manufacturing, rig instrumentation and optimization software. The Company is a provider of directional drilling and measurement while drilling (MWD) systems and services. The Company also provides drilling technology and equipment, and well-site services.
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