Head to Head Survey: Rowan Companies (RDC) and Transocean Partners (RIGP)

Rowan Companies (NYSE: RDC) and Transocean Partners (NYSE:RIGP) are both small-cap oils/energy companies, but which is the superior business? We will compare the two companies based on the strength of their profitability, analyst recommendations, institutional ownership, risk, earnings, valuation and dividends.

Profitability

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

Net Margins Return on Equity Return on Assets
Rowan Companies -4.76% -0.61% -0.38%
Transocean Partners 53.12% 13.03% 15.28%

Earnings & Valuation

This table compares Rowan Companies and Transocean Partners’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Rowan Companies $1.84 billion 0.92 $320.60 million ($0.52) -25.71
Transocean Partners N/A N/A N/A $2.41 7.40

Rowan Companies has higher revenue and earnings than Transocean Partners. Rowan Companies is trading at a lower price-to-earnings ratio than Transocean Partners, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of current recommendations and price targets for Rowan Companies and Transocean Partners, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Rowan Companies 2 11 6 0 2.21
Transocean Partners 0 0 1 0 3.00

Rowan Companies presently has a consensus price target of $16.43, suggesting a potential upside of 22.88%. Transocean Partners has a consensus price target of $18.00, suggesting a potential upside of 0.95%. Given Rowan Companies’ higher probable upside, analysts clearly believe Rowan Companies is more favorable than Transocean Partners.

Dividends

Transocean Partners pays an annual dividend of $1.45 per share and has a dividend yield of 8.1%. Rowan Companies does not pay a dividend. Transocean Partners pays out 60.2% of its earnings in the form of a dividend. Rowan Companies has raised its dividend for 2 consecutive years and Transocean Partners has raised its dividend for 2 consecutive years.

Institutional & Insider Ownership

29.0% of Transocean Partners shares are owned by institutional investors. 0.8% of Rowan Companies shares are owned by insiders. Comparatively, 0.1% of Transocean Partners shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Summary

Transocean Partners beats Rowan Companies on 7 of the 12 factors compared between the two stocks.

About Rowan Companies

Rowan Companies plc is a provider of offshore contract drilling services to the international oil and gas industry. The Company operates through two segments: deepwater and jack-ups. Its deepwater segment consists of drillship operations. As of December 31, 2016, the Company’s fleet consisted of 29 mobile offshore drilling units, including 25 self-elevating jack-up rigs and four ultra-deepwater drillships. The Company’s fleet operates across the world, including the United States Gulf of Mexico (US GOM), the United Kingdom and Norwegian sectors of the North Sea, the Middle East and Trinidad. As of February 14, 2017, the Company’s drilling fleet consisted of four ultra-deepwater drillships; 19 high-specification cantilever jack-up rigs, and six premium cantilever jack-up rigs. Its jack-ups are capable of drilling wells to maximum depths ranging from 25,000 to 40,000 feet and in maximum water depths ranging from 300 to 550 feet, depending on rig size, location and outfitting.

About Transocean Partners

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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