Critical Survey: WBI (NYSE:WBI) versus Transocean (NYSE:RIG)

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

Analyst Ratings

This is a summary of current recommendations and price targets for Transocean and WBI, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Transocean	3	4	3	2	2.33
WBI	0	2	4	2	3.00

Transocean currently has a consensus target price of $6.68, suggesting a potential upside of 27.33%. WBI has a consensus target price of $36.62, suggesting a potential upside of 47.80%. Given WBI’s stronger consensus rating and higher possible upside, analysts clearly believe WBI is more favorable than Transocean.

Institutional & Insider Ownership

67.7% of Transocean shares are held by institutional investors. 9.7% of Transocean shares are held by company insiders. Comparatively, 50.6% of WBI shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Dividends

Transocean pays an annual dividend of $0.60 per share and has a dividend yield of 11.4%. WBI pays an annual dividend of $0.20 per share and has a dividend yield of 0.8%. Transocean pays out 428.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. WBI pays out 100.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Transocean	7.25%	1.84%	1.00%
WBI	1.19%	1.19%	0.58%

Volatility and Risk

Transocean has a beta of 1.44, indicating that its share price is 44% more volatile than the S&P 500. Comparatively, WBI has a beta of 0.14, indicating that its share price is 86% less volatile than the S&P 500.

Valuation & Earnings

This table compares Transocean and WBI”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Transocean	$4.03 billion	1.45	-$2.92 billion	$0.14	37.46
WBI	$525.55 million	5.82	$11.89 million	$0.20	123.90

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

Summary

WBI beats Transocean on 9 of the 16 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 WBI

WaterBridge Infrastructure LLC is an integrated, pure-play water infrastructure company. WaterBridge Infrastructure LLC is based in HOUSTON.