Noble (NE) and Transocean (RIG) Critical Contrast

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

Institutional & Insider Ownership

86.8% of Noble shares are held by institutional investors. Comparatively, 63.1% of Transocean shares are held by institutional investors. 1.0% of Noble shares are held by company insiders. Comparatively, 14.1% of Transocean shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Earnings and Valuation

This table compares Noble and Transocean’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Noble $1.24 billion 1.11 -$516.51 million ($1.14) -4.89
Transocean $2.97 billion 2.11 -$3.13 billion ($0.06) -226.92

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

Profitability

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

Net Margins Return on Equity Return on Assets
Noble -32.20% -6.29% -3.46%
Transocean -120.20% -1.79% -1.01%

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Noble and Transocean, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Noble 4 10 3 0 1.94
Transocean 7 8 12 0 2.19

Noble presently has a consensus price target of $4.35, suggesting a potential downside of 21.96%. Transocean has a consensus price target of $11.64, suggesting a potential downside of 14.54%. Given Transocean’s stronger consensus rating and higher possible upside, analysts clearly believe Transocean is more favorable than Noble.

Volatility & Risk

Noble has a beta of 2.16, meaning that its stock price is 116% more volatile than the S&P 500. Comparatively, Transocean has a beta of 1.47, meaning that its stock price is 47% more volatile than the S&P 500.

Summary

Transocean beats Noble on 9 of the 14 factors compared between the two stocks.

About Noble

Noble Corporation plc operates as an offshore drilling contractor for the oil and gas industry worldwide. It provides contract drilling services using mobile offshore drilling units. As of December 31, 2017, the company operated a fleet of 8 drill ships, 6 semisubmersibles, and 14 jack ups. Noble Corporation plc was founded in 1921 and is headquartered in London, the United Kingdom.

About Transocean

Transocean Ltd., together with its subsidiaries, provides offshore contract drilling services for oil and gas wells worldwide. The company primarily offers deepwater and harsh environment drilling services. As of February 20, 2018, it owned or had partial ownership interests in, and operated 47 mobile offshore drilling units that consist of 27 ultra-deepwater floaters, 12 harsh environment floaters, 2 deepwater floaters, 6 midwater floaters, and 2 high-specification jackups. The company serves government-controlled oil companies and independent oil companies. Transocean Ltd. was founded in 1953 and is based in Steinhausen, Switzerland.

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