, the industry leader in deep sea drilling, to beat expectations
when it reports second-quarter 2013 results after the market
closes on Aug 7, 2013.
Why a Likely Positive Surprise?
Our proven model shows that Transocean has the right
combination of two key factors to beat earnings.
Positive Zacks ESP:
Expected Surprise Prediction or ESP (Read:
Zacks Earnings ESP: A Better Method
), which represents the difference between the Most Accurate
estimate of $1.10 and the Zacks Consensus Estimate of $1.06,
stands at +3.77%. This is a meaningful and leading indicator of a
likely positive earnings surprise for shares.
Zacks Rank #3 (Hold):
The stocks with a Zacks Rank #1 (Strong Buy), Zacks Rank #2 (Buy)
and Zacks Rank #3 (Hold) have a significantly higher chance of
beating earnings. The Sell-rated stocks (#4 and #5) should never
be considered while going into an earnings announcement.
The combination of Transocean's Zacks Rank #3 (Hold) and
+3.77% ESP makes us confident of an earnings beat.
What is Driving the Better-Than-Expected
With less oil being discovered on land and companies having to
dig ever deeper to get their reserves, Transocean is poised to
benefit from a market with robust multi-year demand trends, given
its technologically advanced and versatile drilling fleet.
We expect Transocean's latest fleet status report highlighting
an increase in the day-rate for some of its projects and hinting
at its cost saving potential to have positive implications on its
Transocean's strong backlog - over $28 billion - enables it to
navigate the current environment better than many of its peers.
Recently, the company acquired contracts worth approximately $180
We view management's decision to share additional income with
shareholders as a positive. In June, the company paid its
shareholders $0.56 per share as dividend. This was the first of
the four slated quarterly dividends annualized to $2.24 per
Other Stocks to Consider
Given below are some other energy firms that are worth
considering as these also have the right combination to post an
earnings beat this quarter:
Natural Gas Services Group Inc.
) has an earnings ESP of +3.57% and a Zacks Rank #1 (Strong
) has an earnings ESP of +4.17% and a Zacks Rank #1 (Strong
Oasis Petroleum Inc.
) has an earnings ESP of +3.33% and a Zacks Rank #3 (Hold).
ENERPLUS CORP (ERF): Free Stock Analysis
NATURAL GAS SVC (NGS): Free Stock Analysis
OASIS PETROLEUM (OAS): Free Stock Analysis
TRANSOCEAN LTD (RIG): Free Stock Analysis
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