Critical Analysis: Transocean Partners (RIGP) and Atwood Oceanics (ATW)

Atwood Oceanics (NYSE: ATW) and Transocean Partners (NYSE:RIGP) are both oils/energy companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, dividends, valuation, risk, analyst recommendations, earnings and profitabiliy.

Risk and Volatility

Atwood Oceanics has a beta of 2.31, suggesting that its stock price is 131% more volatile than the S&P 500. Comparatively, Transocean Partners has a beta of 1.68, suggesting that its stock price is 68% more volatile than the S&P 500.

Profitability

This table compares Atwood Oceanics and Transocean Partners’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Atwood Oceanics 11.40% 4.35% 3.05%
Transocean Partners 53.12% 13.03% 15.28%

Earnings & Valuation

This table compares Atwood Oceanics and Transocean Partners’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Atwood Oceanics $711.29 million 1.02 $376.19 million $1.38 6.53
Transocean Partners N/A N/A N/A $2.07 8.61

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

Dividends

Transocean Partners pays an annual dividend of $1.45 per share and has a dividend yield of 8.1%. Atwood Oceanics does not pay a dividend. Transocean Partners pays out 70.0% of its earnings in the form of a dividend. Transocean Partners has raised its dividend for 2 consecutive years.

Institutional and Insider Ownership

91.7% of Atwood Oceanics shares are owned by institutional investors. Comparatively, 29.0% of Transocean Partners shares are owned by institutional investors. 1.2% of Atwood Oceanics shares are owned by company insiders. Comparatively, 0.1% of Transocean Partners shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Analyst Ratings

This is a summary of recent ratings for Atwood Oceanics and Transocean Partners, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Atwood Oceanics 3 15 6 0 2.13
Transocean Partners 0 4 1 0 2.20

Atwood Oceanics currently has a consensus target price of $11.91, suggesting a potential upside of 32.16%. Transocean Partners has a consensus target price of $12.55, suggesting a potential downside of 29.61%. Given Atwood Oceanics’ higher possible upside, analysts plainly believe Atwood Oceanics is more favorable than Transocean Partners.

About Atwood Oceanics

Atwood Oceanics, Inc. is an offshore drilling company engaged in the drilling and completion of exploration and development wells for the global oil and gas industry. The Company owns various types of drilling rigs, such as Ultra-Deepwater Rigs, Deepwater Semisubmersibles and Jackups. Its Ultra-deepwater Rigs and Deepwater Semisubmersibles include Atwood Achiever, Atwood Archer, Atwood Admiral, Atwood Advantage, Atwood Condor, Atwood Eagle and Atwood Osprey. Its Jackup Rigs included Atwood Mako, Atwood Manta, Atwood Aurora, Atwood Beacon and Atwood Orca. The Atwood Mako and Atwood Manta, both approximately 400-foot water depth Pacific Class jackup rigs, are operating offshore Vietnam and offshore Thailand. The Atwood Aurora, an approximately 350-foot water depth jackup, is operating offshore West Africa. The Atwood Beacon, an approximately 400-foot water depth jackup, is operating in the Mediterranean Sea.

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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