Markets
WTI

Transocean (RIG) to Post Q4 Earnings: Is a Beat in Store?

Highs and Lows Stock Data

Offshore drilling powerhouse Transocean Ltd.RIG is set to release fourth-quarter 2016 results after the closing bell on Wednesday, Feb 22.

In the preceding three-month period, the company delivered a positive earnings surprise of 78.57%. Coming to the earnings surprise history, the company has a good record. It surpassed estimates in all of the last four quarters with an average positive surprise of 543.52%.

Let's see how things are shaping up for this announcement.

Why a Likely Positive Surprise?

Our proven model shows that Transocean is likely to beat on earnings because it has the right combination of two key ingredients.

Positive Zacks ESP:Earnings ESP , which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, stands at +66.67%. This is very meaningful and a leading indicator of a likely positive earnings surprise.You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter .

Zacks Rank: Transocean carries a Zacks Rank #3 (Hold). The company's favorable Zacks Rank and positive Earnings ESP makes us confident about an earnings beat this time around.

Note that stocks with Zacks Ranks #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating on earnings.

Conversely, the Sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions.

What is Driving the Better-Than-Expected Earnings?

Transocean is one of the world's largest offshore drilling companies with a technologically advanced and versatile fleet.

Transocean Ltd. Price and EPS Surprise

Transocean Ltd. Price and EPS Surprise | Transocean Ltd. Quote

The recent agreement by OPEC has further cemented investor confidence on the Transocean stock, which has rallied more than 39% in the past six months. Shares of the company outperformed the Zacks categorized ' Oil & Gas-Drilling' industry that rose about 37% during the same period. We believe that the OPEC-driven rally in crude prices would help in rekindling interest in offshore projects.

Transocean's strong backlog of an industry-leading $12.2 billion not only reflects steady demand from customers but also offers an unmatched level of earnings and cash flow visibility. This should enable Transocean to navigate the current uncertain environment better than many of its peers. Transocean has also been able to significantly reduce its operating expenses in the last few quarter.

Stocks to Consider

Transocean is not the only company looking up this earnings season. Here are some firms from the energy space that you may want to consider on the basis of our model, which shows that they too have the right combination of elements to post an earnings beat this quarter.

W&T Offshore, Inc. WTI is expected to release fourth-quarter earnings results on Mar 14. The company has an Earnings ESP of +73.91% and a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here .

Sprague Resources LP SRLP has an Earnings ESP of +3.64% and a Zacks Rank #2. The partnership is anticipated to release fourth-quarter earnings on Mar 9.

Carrizo Oil & Gas, Inc. CRZO has an Earnings ESP of +6.25% and a Zacks Rank #2. The company is likely to release fourth-quarter earnings on Feb 23.

Just Released - Driverless Cars: Your Roadmap to Mega-Profits Today

In this latest Special Report, Zacks' Aggressive Growth Strategist Brian Bolan explores a full-blown technological breakthrough in the making - autonomous cars. He also spotlights 8 stocks with tremendous gain potential to feed off this phenomenon. Click to see the stocks right now >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Transocean Ltd. (RIG): Free Stock Analysis Report

W&T Offshore, Inc. (WTI): Free Stock Analysis Report

Carrizo Oil & Gas, Inc. (CRZO): Free Stock Analysis Report

Sprague Resources LP (SRLP): Free Stock Analysis Report

To read this article on Zacks.com click here.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

WTI RIG SRLP

Other Topics

Earnings Stocks

Latest Markets Videos

    Zacks

    Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

    Learn More