Critical Survey: Noble (NYSE:NE) & Transocean (NYSE:RIG)

Noble (NYSE:NE) and Transocean (NYSE:RIG) are both mid-cap energy companies, but which is the better investment? We will contrast the two companies based on the strength of their analyst recommendations, risk, institutional ownership, dividends, profitability, earnings and valuation.

Insider and Institutional Ownership

68.1% of Noble shares are owned by institutional investors. Comparatively, 67.7% of Transocean shares are owned by institutional investors. 1.2% of Noble shares are owned by company insiders. Comparatively, 12.5% of Transocean shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Profitability

This table compares Noble and Transocean’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Noble	6.60%	2.34%	1.40%
Transocean	-73.52%	0.41%	0.22%

Volatility and Risk

Noble has a beta of 1.12, suggesting that its share price is 12% more volatile than the S&P 500. Comparatively, Transocean has a beta of 1.45, suggesting that its share price is 45% more volatile than the S&P 500.

Valuation and Earnings

This table compares Noble and Transocean”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Noble	$3.29 billion	2.19	$216.72 million	$1.35	33.46
Transocean	$3.97 billion	1.77	-$2.92 billion	($3.28)	-1.94

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

Analyst Ratings

This is a summary of recent ratings and target prices for Noble and Transocean, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Noble	1	10	1	0	2.00
Transocean	3	4	2	0	1.89

Noble presently has a consensus price target of $38.63, indicating a potential downside of 14.48%. Transocean has a consensus price target of $5.86, indicating a potential downside of 8.01%. Given Transocean’s higher probable upside, analysts clearly believe Transocean is more favorable than Noble.

Summary

Noble beats Transocean on 9 of the 14 factors compared between the two stocks.

About Noble

Noble Corp. Plc engages in the provision offshore drilling services for oil and gas industry. It focuses on a balanced fleet of floating and jackup rigs and the deployment of drilling rigs in oil and gas basins around the world. The company was founded by Lloyd Noble and Art Olson in 1921 and is headquartered in London, the United Kingdom.

About Transocean

Transocean Ltd., together with its subsidiaries, provides offshore contract drilling services for oil and gas wells worldwide. It contracts mobile offshore drilling rigs, related equipment, and work crews to drill oil and gas wells. The company operates a fleet of mobile offshore drilling units, consisting of ultra-deepwater floaters and harsh environment floaters. It serves integrated energy companies, government-owned or government-controlled energy companies, and other independent energy companies. The company was founded in 1926 and is based in Steinhausen, Switzerland.