Nabors Industries (NYSE: NBR) and Transocean (NYSE:RIG) are both oils/energy companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, analyst recommendations, institutional ownership, risk, profitability, earnings and valuation.

Profitability

This table compares Nabors Industries and Transocean’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Nabors Industries -32.35% -13.31% -5.32%
Transocean -33.52% 2.20% 1.30%

Valuation and Earnings

This table compares Nabors Industries and Transocean’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Nabors Industries $2.25 billion 0.80 $535.84 million ($2.55) -2.46
Transocean $3.42 billion 0.87 $1.83 billion ($2.87) -2.64

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

Insider and Institutional Ownership

98.7% of Nabors Industries shares are held by institutional investors. Comparatively, 69.3% of Transocean shares are held by institutional investors. 4.1% of Nabors Industries shares are held by company insiders. Comparatively, 0.3% of Transocean shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Volatility and Risk

Nabors Industries has a beta of 1.55, suggesting that its share price is 55% more volatile than the S&P 500. Comparatively, Transocean has a beta of 1.68, suggesting that its share price is 68% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Nabors Industries and Transocean, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Nabors Industries 0 8 17 0 2.68
Transocean 11 14 8 0 1.91

Nabors Industries currently has a consensus price target of $13.95, indicating a potential upside of 122.53%. Transocean has a consensus price target of $12.51, indicating a potential upside of 65.09%. Given Nabors Industries’ stronger consensus rating and higher possible upside, equities analysts clearly believe Nabors Industries is more favorable than Transocean.

Dividends

Nabors Industries pays an annual dividend of $0.24 per share and has a dividend yield of 3.8%. Transocean does not pay a dividend. Nabors Industries pays out -9.4% of its earnings in the form of a dividend. Nabors Industries has raised its dividend for 4 consecutive years and Transocean has raised its dividend for 3 consecutive years.

Summary

Nabors Industries beats Transocean on 10 of the 16 factors compared between the two stocks.

Nabors Industries Company Profile

Nabors Industries Ltd. owns and operates a land-based drilling rig fleet. The Company is a provider of offshore platform drilling rigs in the United States and multiple international markets. The Company conducts its Drilling & Rig Services business through four segments: U.S. Drilling, Canada Drilling, International Drilling and Rig Services. The Company provides wellbore placement services, drilling software and performance tools, drilling equipment and various technologies throughout the oil and gas markets. The Company’s Drilling & Rig Services business comprises land-based and offshore drilling rig operations and other rig services, consisting of equipment manufacturing, rig instrumentation and optimization software. The Company is a provider of directional drilling and measurement while drilling (MWD) systems and services. The Company also provides drilling technology and equipment, and well-site services.

Transocean Company Profile

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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