Transocean’s share price reaction
Transocean (RIG) released its financial information for 4Q15 on February 24, 2016. Transocean’s share price increased by 1.5% to $8.67 on the day—a positive reaction likely triggered by the fact that RIG’s earnings beat Wall Street analyst expectations. But since the beginning of 2016, RIG’s share price has dipped by 31%.
Diamond Offshore Drilling (DO), RIG’s peer in the oilfield equipment and services industry, released its financial information for 4Q15 on February 8, and DO’s share price increased by ~2% on the day. Notably, in November 2015, Transocean canceled its 3Q15 and 4Q15 quarterly dividends. RIG makes up 0.02% of the SPDR S&P 500 ETF (SPY).
Transocean’s share price returns vis-à-vis industry
In the past year, Transocean’s stock has returned -47% (net of dividends) as of February 24. In the same period, RIG has underperformed the VanEck Vectors Oil Services ETF (OIH), which has returned -31%. By comparison, the Energy Select Sector SPDR ETF (XLE)—the broader energy industry ETF—has produced a return of -27%. RIG, however, has outperformed the US offshore rig count, which returned -54% in the same period.
Transocean has significantly underperformed the SPDR S&P 500 ETF (SPY), which has returned -7% during in the past year as of February 24. Nabors Industries (NBR) has performed nearly on par with RIG, returning -45% (net of dividends) in the same period (Check out “Why Transocean’s Long-Term Outlook Is Full of Uncertainty” for more on why Transocean has underperformed the industry.)
In the next and final part of this series, we’ll discuss the Wall Street analyst targets for Transocean.