Analysts Expect Transocean’s Earnings to Fall 16%



Earnings estimate

Along with the fall in its revenue, analysts expect Transocean’s (RIG) EBITDA (earnings before interest, tax, depreciation, and amortization) to fall in 4Q16. Analysts’ estimate for Transocean’s EBITDA in 4Q16 is $389 million—a 16% fall from the $464 million reported in 3Q16 and a 40% fall year-over-year.

For 1Q17, the company’s estimated EBITDA stands at $324 million. Analysts’ estimates for Transocean’s EBITDA in 2016 and 2017 are ~$1.7 billion and $663 million, respectively—much lower than its EBITDA of ~$2 billion in 2015. Falling EBITDA have been common among offshore drillers (IYE) during the current downturn.

Based on its EBITDA and revenue, Transocean’s EBITDA margin is 43.4%. Peers’ EBITDA margins, based on their EBITDA and revenue were are as follows:

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Earnings per share estimate

Wall Street analysts forecast Transocean’s EPS (earnings per share) to fall as well. The estimated fall is 8% to $0.07 per share in 4Q16, compared with $0.25 per share in 3Q16.

A drastic fall is also expected in the coming years. Fiscal 2016 EPS are expected to fall 69% to $1.14 from EPS of $3.71 in 2015. In 2017, analysts expect negative EPS for Transocean.


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