Seadrill (SDRL) and Transocean Partners (NYSE:RIGP) Critical Analysis

Seadrill (NASDAQ: SDRL) and Transocean Partners (NYSE:RIGP) are both energy companies, but which is the superior stock? We will compare the two companies based on the strength of their analyst recommendations, risk, valuation, dividends, profitability, earnings and institutional ownership.

Dividends

Transocean Partners pays an annual dividend of $1.45 per share and has a dividend yield of 8.1%. Seadrill does not pay a dividend. Transocean Partners pays out 70.0% of its earnings in the form of a dividend. Seadrill has raised its dividend for 2 consecutive years.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Seadrill and Transocean Partners, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Seadrill 5 1 0 0 1.17
Transocean Partners 0 0 1 0 3.00

Seadrill currently has a consensus target price of $3.50, indicating a potential upside of 1,150.00%. Transocean Partners has a consensus target price of $18.00, indicating a potential upside of 0.95%. Given Seadrill’s higher possible upside, equities analysts clearly believe Seadrill is more favorable than Transocean Partners.

Profitability

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

Net Margins Return on Equity Return on Assets
Seadrill 10.02% 2.69% 1.06%
Transocean Partners 53.12% 13.03% 15.28%

Insider & Institutional Ownership

29.0% of Transocean Partners shares are held by institutional investors. 0.1% of Transocean Partners shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares Seadrill and Transocean Partners’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Seadrill $2.65 billion 0.05 $1.44 billion N/A N/A
Transocean Partners N/A N/A N/A $2.07 8.61

Seadrill has higher revenue and earnings than Transocean Partners.

Summary

Transocean Partners beats Seadrill on 8 of the 12 factors compared between the two stocks.

Seadrill 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.

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.

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