Head-To-Head Contrast: SBM Offshore (OTCMKTS:SBFFY) and Transocean (NYSE:RIG)

Transocean (NYSE:RIG) and SBM Offshore (OTCMKTS:SBFFY) are both energy companies, but which is the better business? We will contrast the two businesses based on the strength of their profitability, earnings, risk, dividends, analyst recommendations, institutional ownership and valuation.

Valuation & Earnings

This table compares Transocean and SBM Offshore”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Transocean	$4.12 billion	1.55	-$2.92 billion	($1.88)	-3.05
SBM Offshore	N/A	N/A	N/A	$1.13	34.83

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

Profitability

This table compares Transocean and SBM Offshore’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Transocean	-40.24%	2.60%	1.37%
SBM Offshore	N/A	N/A	N/A

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Transocean and SBM Offshore, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Transocean	3	4	3	1	2.18
SBM Offshore	0	1	0	0	2.00

Transocean presently has a consensus target price of $6.68, suggesting a potential upside of 16.66%. Given Transocean’s stronger consensus rating and higher possible upside, research analysts plainly believe Transocean is more favorable than SBM Offshore.

Dividends

Transocean pays an annual dividend of $0.60 per share and has a dividend yield of 10.5%. SBM Offshore pays an annual dividend of $0.85 per share and has a dividend yield of 2.2%. Transocean pays out -31.9% of its earnings in the form of a dividend. SBM Offshore pays out 74.9% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Transocean is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider and Institutional Ownership

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

Summary

Transocean beats SBM Offshore on 11 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 SBM Offshore

SBM Offshore N.V. provides floating production solutions to the offshore energy industry worldwide. It operates in two segments, Lease and Operate, and Turnkey. It engages in the design, supply, installation, operation, lease, and life extension of floating production storage and offloading (FPSO) vessels, as well as semi-submersibles, tension leg floaters, turret mooring systems, floating offshore wind, and brownfield and offshore loading terminals. The company also provides catenary anchor leg mooring (CALM) or single point mooring (SPM) terminals; and solutions for flexible flowline and subsea structure installation works. It operates a fleet of 15 FPSOs and 1 semi-submersible unit. The company was formerly known as IHC Caland and changed its name to SBM Offshore N.V. in 2005. SBM Offshore N.V. was founded in 1862 and is headquartered in Schiphol, the Netherlands.