Transocean LTD (RIG)
NYSE:RIG
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Transocean
(NYSE:RIG)
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Rating:64Neutral
Price Target:
$7.50
▲(26.26% Upside)
Action:Reiterated
Date:05/27/26
The score is driven primarily by improving cash generation and constructive earnings-call operating momentum/backlog visibility, partially offset by deeply negative recent net income and shareholder returns. Technicals are supportive with a steady uptrend, while valuation is only fair given a ~25.9 P/E and no dividend.
Positive Factors
Strengthening cash generation
Durable, positive operating and free cash flow despite accounting losses provides ongoing internal funding for debt paydowns, opportunistic capital expenditures, and working capital. This cash conversion underpins deleveraging targets and gives management flexibility to withstand cyclical drilling demand swings over the next several quarters.
Negative Factors
Deep accounting losses and negative ROE
Persistent, large net losses and materially negative ROE weaken long-term shareholder returns and could erode equity cushions if losses persist. Even with strong cash flow, recurring accounting deficits complicate investor returns, may constrain strategic optionality, and increase scrutiny on cost and integration assumptions.
Read all positive and negative factors
Positive Factors
Negative Factors
Strengthening cash generation
Durable, positive operating and free cash flow despite accounting losses provides ongoing internal funding for debt paydowns, opportunistic capital expenditures, and working capital. This cash conversion underpins deleveraging targets and gives management flexibility to withstand cyclical drilling demand swings over the next several quarters.
Read all positive factors
Transocean Key Performance Indicators (KPIs)
Transocean (RIG) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$6.98B
Dividend YieldN/A
Average Volume (3M)36.04M
Price to Earnings (P/E)―
Beta (1Y)0.96
Revenue Growth12.90%
EPS Growth-274.70%
CountryUS
Employees5,470
SectorEnergy
Sector Strength52
IndustryOil & Gas Drilling
Share Statistics
EPS (TTM)-3.05
Shares Outstanding1,116,622,100
10 Day Avg. Volume33,015,673
30 Day Avg. Volume36,038,530
Financial Highlights & Ratios
PEG Ratio>-0.01
Price to Book (P/B)0.49
Price to Sales (P/S)1.00
P/FCF Ratio6.33
Enterprise Value/Market Cap1.47
Enterprise Value/Revenue2.48
Enterprise Value/Gross Profit2.92
Enterprise Value/Ebitda-6.61
Forecast
1Y Price Target
$6.99Price Target Upside17.60% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering7
EPS Forecast (FY)0.14
Revenue Forecast (FY)$3.86B
Transocean Business Overview & Revenue Model
Company Description
Transocean Ltd., together with its subsidiaries, provides offshore contract drilling services for oil and gas wells worldwide. It contracts its mobile offshore drilling rigs, related equipment, and work crews to drill oil and gas wells. As of Febr...
How the Company Makes Money
Transocean primarily makes money by contracting its offshore drilling rigs and crews to oil and gas companies under drilling contracts. The core revenue stream is contract drilling revenue, which is typically earned based on dayrate pricing (a fix...
Transocean Earnings Call Summary
Earnings Call Date:May 04, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:Aug 03, 2026
Earnings Call Sentiment Positive
The call communicated strong operational execution, robust profitability (Adjusted EBITDA $440M, >40% margin), meaningful backlog growth (~$1.6B incremental; backlog >$7B), improved market visibility with deepwater utilization expected near 100% by 2027, and deliberate balance-sheet improvements (early debt retirements and targeted cost savings). Counterpoints include an antitrust second request on the Valaris acquisition that introduces potential timing/risk, a modest $50M reduction to the upper revenue outlook, modestly higher capex and emerging inflationary pressures (fuel +~100%, freight +30%–50%) and continued reactivation economics that keep some assets cold-stacked. Overall, positive operational and financial momentum outweighs the identified risks, though timing and macro-driven cost pressures warrant monitoring.Positive Updates
Strong operational performance and safety
Operational uptime of 98% in the quarter; zero life-changing injuries or operational integrity events, reflecting high operational reliability and safety performance.
Negative Updates
Regulatory review risk for Valaris acquisition
Received a second request for additional information from the U.S. Department of Justice as part of the antitrust review for the Valaris acquisition; while management remains confident in approval and a 2026 close, the second request introduces timing uncertainty and the potential for remedies or extended review.
Read all updates
Q1-2026 Updates
Positive
Negative
Strong operational performance and safety
Operational uptime of 98% in the quarter; zero life-changing injuries or operational integrity events, reflecting high operational reliability and safety performance.
Read all positive updates
Company Guidance
On guidance, management made only modest standalone updates: the upper end of 2026 revenue guidance was lowered by $50 million to $3.9 billion and full-year capital expenditures were increased by $20 million (about half for a Norway exhaust upgrade recoverable under contract); Q1 outperformance included contract drilling revenue of $1.08 billion, revenue efficiency >97% (versus guidance of 90.5%, worth ~$9 million), adjusted EBITDA of $440 million (margin >40%), operating cash flow of $164 million and free cash flow of $136 million after $28 million of capex. Liquidity and leverage guidance: unrestricted cash was $330 million at quarter end (≈$495 million as of May 4), total liquidity was ~$1.1 billion (post-Titan retirement) with year-end standalone liquidity expected at $1.25–1.35 billion; debt principal remaining ≈$5.1 billion (after an opportunistic $358 million note retirement saving nearly $40 million of interest), the company expects to retire at least $750 million of debt in 2026 to end the year near $4.9 billion, and reported trailing 12‑month net debt/adjusted EBITDA of ~3.1x (implying ~3.3x at year-end on consensus EBITDA). Finally, management reiterated targets to deliver $250 million of cost savings versus 2024 through 2026 (plus >$200 million of Valaris synergies pro forma), and highlighted firm backlog and coverage of >$7 billion and 86%/73% contract coverage for 2026/2027 (pro forma backlog ≈$12 billion).Transocean Financial Statement Overview
Summary
Income Statement
32
Negative
Balance Sheet
58
Neutral
Cash Flow
71
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 4.14B | 3.96B | 3.52B | 2.83B | 2.58B | 2.56B |
| Gross Profit | 3.51B | 3.31B | 2.79B | 2.09B | 1.84B | 1.81B |
| EBITDA | -1.55B | -1.73B | 582.00M | 501.00M | 851.00M | 939.00M |
| Net Income | -2.77B | -2.92B | -512.00M | -954.00M | -621.00M | -592.00M |
Balance Sheet | ||||||
| Total Assets | 15.15B | 15.64B | 19.37B | 20.25B | 20.44B | 20.68B |
| Cash, Cash Equivalents and Short-Term Investments | 615.00M | 997.00M | 560.00M | 995.00M | 683.00M | 976.00M |
| Total Debt | 5.27B | 5.66B | 7.25B | 7.85B | 7.82B | 7.69B |
| Total Liabilities | 6.96B | 7.53B | 9.09B | 9.84B | 9.64B | 9.47B |
| Stockholders Equity | 8.19B | 8.11B | 10.28B | 10.41B | 10.79B | 11.21B |
Cash Flow | ||||||
| Free Cash Flow | 796.00M | 626.00M | 193.00M | -263.00M | -269.00M | 367.00M |
| Operating Cash Flow | 887.00M | 749.00M | 447.00M | 164.00M | 448.00M | 575.00M |
| Investing Cash Flow | 35.00M | -33.00M | -151.00M | -423.00M | -757.00M | -233.00M |
| Financing Cash Flow | -998.00M | -660.00M | -350.00M | 263.00M | -112.00M | -490.00M |
Transocean Technical Analysis
Neutral
5.94
Price Trends
6.55
Negative
6.09
Positive
4.89
Positive
Market Momentum
-0.08
Positive
41.23
Neutral
8.36
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RIG, the sentiment is Neutral. The current price of 5.94 is below the 20-day moving average (MA) of 6.61, below the 50-day MA of 6.55, and above the 200-day MA of 4.89, indicating a neutral trend. The MACD of -0.08 indicates Positive momentum. The RSI at 41.23 is Neutral, neither overbought nor oversold. The STOCH value of 8.36 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for RIG.
Transocean Peers Comparison
UnderperformOutperform
Sector (65)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
65 Neutral | $15.17B | 7.61 | 4.09% | 5.20% | 3.87% | -62.32% | |
64 Neutral | $6.98B | -2.48 | -32.79% | ― | 12.90% | -274.70% | |
64 Neutral | $6.42B | 6.34 | 36.16% | ― | -9.95% | 233.69% | |
64 Neutral | $2.95B | -118.58 | -0.84% | ― | 7.91% | -120.67% | |
62 Neutral | $3.93B | -10.21 | -14.16% | 3.24% | 29.73% | -272.28% | |
61 Neutral | $1.40B | 6.58 | 40.63% | ― | 10.21% | ― | |
55 Neutral | $1.65B | 43.40 | 3.14% | 5.99% | 5.84% | -19.93% |
* Energy Sector Average
RIG
Transocean
6.25
3.56
132.34%
HP
Helmerich & Payne
39.60
23.91
152.37%
NBR
Nabors Industries
101.09
72.59
254.70%
BORR
Borr Drilling
5.05
3.24
179.01%
VAL
Valaris
92.91
53.44
135.39%
SDRL
Seadrill Limited
45.67
21.17
86.41%
Transocean Corporate Events
Business Operations and StrategyExecutive/Board ChangesShareholder Meetings
Transocean Shareholders Approve Major Share Increase and Governance Changes
Positive
May 26, 2026
At its Annual General Meeting on May 22, 2026, in Zug, Switzerland, Transocean shareholders approved an amendment to the company’s Articles of Association authorizing the issuance of up to 240.8 million additional shares through May 22, 2027...
Business Operations and StrategyExecutive/Board ChangesM&A Transactions
Transocean Signs Governance Support Pact Amid Valaris Deal
Neutral
May 19, 2026
On May 19, 2026, Transocean Ltd. entered into a support agreement with Famatown Finance Limited and related parties that grants Famatown the right to have Kristian Johansen nominated for election to Transocean’s board, tied to shareholder ap...
Business Operations and StrategyLegal ProceedingsM&A TransactionsRegulatory Filings and Compliance
Transocean–Valaris merger faces intensified U.S. antitrust review
Negative
May 5, 2026
On February 9, 2026, Transocean entered into a Business Combination Agreement to acquire all outstanding common shares of Bermuda-based Valaris Limited in an all-stock transaction, offering 15.235 Transocean shares for each Valaris share. The deal...
Business Operations and StrategyFinancial Disclosures
Transocean Delivers Strong Q1 2026 Results, Grows Backlog
Positive
May 4, 2026
In the first quarter of 2026, Transocean reported contract drilling revenues of $1.08 billion, net income of $71 million, adjusted EBITDA of $440 million with a margin above 40%, and free cash flow of $136 million, supported by 97.3% revenue effic...
Business Operations and Strategy
Transocean Adds Major Ultra-Deepwater Contract, Boosting Backlog
Positive
Apr 16, 2026
On April 16, 2026, Transocean Ltd. announced that its ultra-deepwater drillship Deepwater Asgard secured a five-well contract in the Eastern Mediterranean Sea with an undisclosed operator. The 390-day campaign, expected to begin in the fourth quar...
Business Operations and Strategy
Transocean Secures Major Petrobras Ultra-Deepwater Contract Extension
Positive
Apr 14, 2026
On April 14, 2026, Transocean said its ultra-deepwater drillship Deepwater Corcovado secured a 1,156-day contract extension from Petrobras, in direct continuation of its current work. The deal adds about $445 million to Transocean’s backlog ...
Business Operations and StrategyFinancial DisclosuresPrivate Placements and Financing
Transocean Adds $1 Billion to Backlog with New Contracts
Positive
Apr 2, 2026
Transocean announced on April 2, 2026 that it secured a new long-term contract in Norway and multi-year extensions in Brazil, adding about $1.0 billion to its firm contract backlog. The Transocean Barents won a 1,095-day harsh-environment deal wit...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.