Transocean Partners (NYSE: RIGP) and Pioneer Energy Services (NYSE:PES) are both small-cap energy companies, but which is the superior investment? We will contrast the two businesses based on the strength of their risk, valuation, institutional ownership, earnings, dividends, analyst recommendations and profitability.

Dividends

Transocean Partners pays an annual dividend of $1.45 per share and has a dividend yield of 8.1%. Pioneer Energy Services does not pay a dividend. Transocean Partners pays out 60.2% of its earnings in the form of a dividend. Transocean Partners has raised its dividend for 3 consecutive years.

Analyst Ratings

This is a summary of recent recommendations for Transocean Partners and Pioneer Energy Services, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Transocean Partners 0 0 0 0 N/A
Pioneer Energy Services 0 5 3 0 2.38

Pioneer Energy Services has a consensus price target of $3.96, indicating a potential upside of 55.23%. Given Pioneer Energy Services’ higher probable upside, analysts clearly believe Pioneer Energy Services is more favorable than Transocean Partners.

Insider & Institutional Ownership

29.0% of Transocean Partners shares are owned by institutional investors. Comparatively, 73.9% of Pioneer Energy Services shares are owned by institutional investors. 0.1% of Transocean Partners shares are owned by insiders. Comparatively, 6.1% of Pioneer Energy Services shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Profitability

This table compares Transocean Partners and Pioneer Energy Services’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Transocean Partners 53.12% 13.03% 15.28%
Pioneer Energy Services -25.19% -26.46% -9.35%

Valuation and Earnings

This table compares Transocean Partners and Pioneer Energy Services’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Transocean Partners N/A N/A N/A $2.41 7.40
Pioneer Energy Services $277.08 million 0.72 -$128.39 million ($1.34) -1.90

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

Summary

Transocean Partners beats Pioneer Energy Services on 7 of the 13 factors compared between the two stocks.

Transocean Partners Company Profile

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.

Pioneer Energy Services Company Profile

Pioneer Energy Services Corp. provides land-based drilling services and production services to a group of independent oil and gas exploration and production companies in the United States and internationally in Colombia. The Company operates through two segments, which include drilling services segment and production services segment. It also provides two of its services (coiled tubing and wireline services) offshore in the Gulf of Mexico. Its drilling services segment provides contract land drilling services to a group of exploration and production companies through the Company’s four drilling divisions in the United States, and internationally in Colombia. Its production services segment provides a range of services to a group of exploration and production companies, with its operations concentrated in the various United States onshore oil and gas producing regions in the Mid-Continent and Rocky Mountain states and in the Gulf Coast.

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