Helmerich & Payne (NYSE: HP) and Transocean (NYSE:RIG) are both mid-cap oils/energy companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitabiliy, earnings, valuation, risk, institutional ownership, dividends and analyst recommendations.
This table compares Helmerich & Payne and Transocean’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Helmerich & Payne||-12.09%||-3.96%||-2.65%|
Earnings and Valuation
This table compares Helmerich & Payne and Transocean’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Helmerich & Payne||$1.47 billion||4.29||$387.17 million||($1.66)||-35.01|
|Transocean||$3.61 billion||0.96||$1.84 billion||$1.66||5.36|
Transocean has higher revenue and earnings than Helmerich & Payne. Helmerich & Payne is trading at a lower price-to-earnings ratio than Transocean, indicating that it is currently the more affordable of the two stocks.
Insider and Institutional Ownership
67.5% of Transocean shares are owned by institutional investors. 3.9% of Helmerich & Payne shares are owned by insiders. Comparatively, 0.3% of Transocean shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.
This is a summary of recent ratings for Helmerich & Payne and Transocean, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Helmerich & Payne||6||10||8||0||2.08|
Helmerich & Payne presently has a consensus target price of $58.60, suggesting a potential upside of 0.83%. Transocean has a consensus target price of $12.68, suggesting a potential upside of 42.59%. Given Transocean’s higher probable upside, analysts clearly believe Transocean is more favorable than Helmerich & Payne.
Helmerich & Payne pays an annual dividend of $2.80 per share and has a dividend yield of 4.8%. Transocean does not pay a dividend. Helmerich & Payne pays out -168.7% of its earnings in the form of a dividend. Helmerich & Payne has raised its dividend for 4 consecutive years and Transocean has raised its dividend for 44 consecutive years.
Risk and Volatility
Helmerich & Payne has a beta of 1.18, suggesting that its stock price is 18% more volatile than the S&P 500. Comparatively, Transocean has a beta of 1.67, suggesting that its stock price is 67% more volatile than the S&P 500.
Transocean beats Helmerich & Payne on 10 of the 15 factors compared between the two stocks.
About Helmerich & Payne
Helmerich & Payne, Inc. is engaged in contract drilling of oil and gas wells for others. The Company operates in the contract drilling industry. The Company’s contract drilling business consists of three segments: U.S. Land, Offshore and International Land. The Company is also engaged in the ownership, development and operation of commercial real estate and the research and development of rotary steerable technology. Its real estate investments are located within Tulsa, Oklahoma, and include a shopping center containing approximately 441,000 leasable square feet, multi-tenant industrial warehouse properties containing approximately one million leasable square feet and approximately 210 acres of undeveloped real estate. The Company provides drilling rigs, equipment, personnel and camps on a contract basis. The Company’s subsidiaries include Helmerich & Payne International Drilling Co. and Helmerich & Payne de Venezuela, C.A.
Transocean Ltd. is an international provider of offshore contract drilling services for oil and gas wells. The Company’s primary business is to contract its drilling rigs, related equipment and work crews on a dayrate basis to drill oil and gas wells. As of February 9, 2017, it owned or had partial ownership interests in and operated 56 mobile offshore drilling units. As of February 9, 2017, its fleet consisted of 30 floaters, seven harsh environment floaters, three deepwater floaters, six midwater floaters and 10 high-specification jackups. As February 9, 2017, it also had four ultra-deepwater drillships and five high-specification jackups under construction or under contract to be constructed. Its contract drilling services operations are spread across oil and gas exploration and development areas throughout the world. The Company’s drilling fleet can be characterized as floaters, including drillships and semisubmersibles, and jackups.
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