Yahoo Finance Results: Transocean Ltd. Exceeded Expectations And The Consensus Has Updated Its Estimates
It's been a mediocre week for Transocean Ltd. (NYSE:RIG) shareholders, with the stock dropping 12% to US$5.22 in the week since its latest first-quarter results. Revenues of US$763m reported a marginal miss, falling short of forecasts by 2.2%, but earnings were better than expected - statutory profits came in at US$0.11 per share, a nice change from the loss the analysts expected. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Transocean after the latest results.
Check out our latest analysis for Transocean
Taking into account the latest results, the most recent consensus for Transocean from 14 analysts is for revenues of US$3.57b in 2024. If met, it would imply a major 21% increase on its revenue over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 74% to US$0.12. Before this latest report, the consensus had been expecting revenues of US$3.63b and US$0.12 per share in losses.
The consensus price target was unchanged at US$7.39, suggesting that the business - losses and all - is executing in line with estimates. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Transocean at US$12.00 per share, while the most bearish prices it at US$6.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. For example, we noticed that Transocean's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 29% growth to the end of 2024 on an annualised basis. That is well above its historical decline of 3.9% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 7.7% annually. Not only are Transocean's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.
The Bottom Line
The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn't be too quick to come to a conclusion on Transocean. Long-term earnings power is much more important than next year's profits. We have forecasts for Transocean going out to 2026, and you can see them free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with Transocean , and understanding this should be part of your investment process.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
