Reviewing USA Compression Partners (NYSE:USAC) and Transocean (NYSE:RIG)

Transocean (NYSE:RIG) and USA Compression Partners (NYSE:USAC) are both mid-cap energy companies, but which is the superior business? We will contrast the two businesses based on the strength of their valuation, institutional ownership, analyst recommendations, dividends, profitability, risk and earnings.

Profitability

This table compares Transocean and USA Compression Partners’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Transocean	-40.24%	2.60%	1.37%
USA Compression Partners	12.43%	179.77%	4.83%

Earnings and Valuation

This table compares Transocean and USA Compression Partners”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Transocean	$3.96 billion	1.81	-$2.92 billion	($1.88)	-3.41
USA Compression Partners	$998.10 million	3.64	$111.32 million	$1.06	23.63

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

Insider & Institutional Ownership

67.7% of Transocean shares are held by institutional investors. Comparatively, 47.8% of USA Compression Partners shares are held by institutional investors. 9.7% of Transocean shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of current recommendations for Transocean and USA Compression Partners, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Transocean	3	4	3	2	2.33
USA Compression Partners	0	5	0	1	2.33

Transocean presently has a consensus price target of $6.68, indicating a potential upside of 4.12%. USA Compression Partners has a consensus price target of $29.50, indicating a potential upside of 17.76%. Given USA Compression Partners’ higher possible upside, analysts clearly believe USA Compression Partners is more favorable than Transocean.

Volatility and Risk

Transocean has a beta of 1.41, indicating that its share price is 41% more volatile than the S&P 500. Comparatively, USA Compression Partners has a beta of 0.28, indicating that its share price is 72% less volatile than the S&P 500.

Summary

USA Compression Partners beats Transocean on 8 of the 14 factors compared between the two stocks.

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.

About USA Compression Partners

USA Compression Partners, LP provides compression services under term contracts with customers in the natural gas and crude oil industries in the United States. The company engineers, designs, operates, services, and repairs its compression units; and maintains related support inventory and equipment. It also provides compression services in various shale plays, including the Utica, Marcellus, Permian Basin, Delaware Basin, Eagle Ford, Mississippi Lime, Granite Wash, Woodford, Barnett, Haynesville, Niobrara, and Fayetteville shales. As of December 31, 2017, the company had approximately 1,799,781 horsepower in its fleet. It serves oil companies; and independent producers, processors, gatherers, and transporters of natural gas and crude oil. USA Compression GP, LLC operates as the general partner of USA Compression Partners, LP. The company was formerly known as Compression Holdings, LP, and changed its name to USA Compression Partners, LP in June 2011. USA Compression Partners, LP was founded in 1998 and is headquartered in Austin, Texas.