Please ensure Javascript is enabled for purposes of website accessibility

Why Transocean Stock Rallied Today

By Matthew DiLallo – Oct 29, 2019 at 4:18PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The offshore drilling company is increasingly optimistic about what lies ahead.

What happened

Shares of Transocean (RIG 4.39%) rallied as much as 14.4% on Tuesday before finishing up about 8% when the market closed at 4:00 p.m. EDT. Fueling the rise in the energy company's shares were its third-quarter results.

So what

Transocean reported somewhat mixed third-quarter results. On a positive note, the offshore driller hauled in $784 million of revenue. While that was 4% below the year-ago tally, it beat analysts' expectations by $10.4 million. The company, however, reported a net loss of $234 million, or $0.38 per share. That was not only worse than the year-ago adjusted loss of $209 million, or $0.34 per share, but also missed the consensus estimate by $0.01 per share.

Oil platform and tanker ship on offshore area at sunset.

Image source: Getty Images.

Investors, however, focused on the positives. One of the biggest was Transocean's outlook. CEO Jeremy Thigpen stated that: "We continue to become more encouraged by our current and future prospects and our increasing level of tender participation. We are gaining improved visibility to additional opportunities in the harsh environment market of Norway; along with escalating interest in our fleet of high-specification ultra-deepwater assets for upcoming projects in the Gulf of Mexico, Brazil, and West Africa." This positive view of the offshore drilling market's recovery suggests that better days are ahead for Transocean.

Now what

After several challenging years, the offshore drilling market has finally started showing signs of life this year. That's becoming increasingly evident in the number of new opportunities that Transocean and its peers have to bid on offshore drilling contracts. This increase in its workload should eventually drive a meaningful improvement in the company's financial results.

Matthew DiLallo has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Transocean Ltd. Stock Quote
Transocean Ltd.
$2.50 (4.39%) $0.10

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/27/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.