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Transocean Earnings: An Early Look

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Earnings season is winding down, with most companies already having reported their quarterly results. But there are still some companies left to report, and Transocean (NYSE: RIG  ) is about to release its quarterly earnings report. The key to making smart investment decisions with stocks releasing their quarter reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

Transocean is still working to rid itself of the hit to its reputation it took from the Deepwater Horizon oil spill, but a red-hot market for deepwater drilling rigs has been extremely profitable for the oil services company. Let's take an early look at what's been happening with Transocean over the past quarter and what we're likely to see in its quarterly report on Monday.

Stats on Transocean

Analyst EPS Estimate


Change From Year-Ago EPS


Revenue Estimate

$2.37 billion

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance.

Will Transocean drill up success this quarter?
Analysts have been stolid in their views on Transocean for the just-ended quarter, having kept their earnings-per-share estimates constant throughout the past three months. But the stock has been a lot more exciting, having risen by 16% since late November.

Investors have recently gotten reminders of Transocean's role in the Gulf oil spill. In mid-February, a federal court judge approved the company's plea bargain with the Justice Department. Under the bargain, Transocean pled guilty to a misdemeanor criminal charge and paid $400 million in penalties. The deal followed up on a previous agreement concerning Clean Water Act violations, which will involve another $1 billion in civil penalties if a separate court approves the bargain.

But Transocean is eager to put the incident behind it, especially given the rampant activity in the deepwater drilling arena right now. Transocean has taken full advantage of dozens of deepwater discoveries from exploration and production companies by boosting its backlog of contracts to nearly $30 billion. Even as rival Seadrill (NYSE: SDRL  ) is building new deepwater rigs at breakneck pace, Transocean continues to see plenty of potential for further growth in the space.

Still, Transocean hasn't been free of challenges. The Brazilian government finally dropped criminal charges against Transocean and Chevron as well as some of their employees in connection with a minor spill off the nation's coast. But in early February, the company found out that drilling connectors it obtained from General Electric (NYSE: GE  ) were faulty and will require up to three-week delays to replace on 55 Transocean rigs.

In its report, look for Transocean to discuss both the status of its legal issues as well as detailed information about the current state of the deepwater industry. Investors will want to see renewed growth from the company, and anything less could send Transocean's stock into the depths.

Find out more about Transocean's fight with its industry rival by reading our premium research report on Seadrill. Inside, one of our top Stock Advisor analysts discusses Seadrill's strengths and weaknesses, as well as what to expect from Seadrill going forward. Click here to get started.

Click here to add Transocean to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

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