It has been about a month since the last earnings report for Transocean (RIG). Shares have added about 5.2% in that time frame, outperforming the S&P 500.
But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Transocean due for a pullback? Well, first let's take a quick look at the most recent earnings report in order to get a better handle on the recent drivers for Transocean Ltd. before we dive into how investors and analysts have reacted as of late.
Transocean Q2 Earnings & Sales Surpass Estimates
Transocean reported second-quarter 2025 breakeven adjusted earnings per share in contrast to the Zacks Consensus Estimate of a loss of 1 cent. The bottom line also improved from the year-ago period’s reported loss of 15 cents. This improvement can be attributed to a strong second-quarter result from RIG's segments.s.
This Switzerland-based offshore drilling powerhouse’s total adjusted revenues of $988 million beat the Zacks Consensus Estimate of $968 million. The top line also increased 14.8% from the prior-year figure of $861 million. This was due to higher-than-expected revenues from ultra-deepwater and harsh environment floaters. Ultra-deepwater and harsh environment revenues beat the consensus mark of $690 million and $257 million, respectively.
Segmental Revenue Breakup
Transocean’s ultra-deepwater floaters contributed 70.7% to net contract drilling revenues, while harsh environment floaters accounted for the remaining 29.3%.
Revenues from the ultra-deepwater and harsh environment floaters totaled $699 million and $289 million, respectively, compared with the year-ago quarter’s reported figures of $606 million and $255 million.
Revenues from ultra-deepwater operations were down from the model estimate of $703.5 million, while the same from harsh environment operations exceeded the prediction of $267.9 million. Revenue efficiency was 96.6%, up from 95.5% in the previous quarter but a slight decline from 96.9% in the year-ago quarter.
Day Rates, Utilization & Backlog
Average day rates in the reported quarter increased to $458,600 from $438,300 in the year-ago quarter. However, the figure missed the Zacks Consensus Estimate of $462,400.
Average revenues per day from ultra-deepwater floaters increased to $457,200 from $433,900 in the year-ago quarter. The same from harsh environment floaters also increased to $462,400 from $449,600 in the prior-year quarter.
Fleet utilization rate was 67.3% in the quarter, which increased from the prior-year period’s 57.8%.
As of June 2025, Transocean’s total backlog was $7.2 billion.
Costs, Capex & Balance Sheet
The company reported $823 million in costs and expenses, which was 5.9% higher than the year-ago quarter’s level of $777 million. Additionally, operations and maintenance costs increased to $599 million from $534 million a year ago.
The oil and gas drilling company spent $24 million on capital investments in the second quarter. Cash used in operating activities was $128 million. Cash and cash equivalents were $377 million as of June 30, 2025. Long-term debt amounted to $6.5 billion, with a debt-to-capitalization of 38.6% as of the same period.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted 5.88% due to these changes.
VGM Scores
Currently, Transocean has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock has a score of B on the value side, putting it in the top 40% for value investors.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions looks promising. Interestingly, Transocean has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Transocean is part of the Zacks Oil and Gas - Drilling industry. Over the past month, Nabors Industries (NBR), a stock from the same industry, has gained 9.1%. The company reported its results for the quarter ended June 2025 more than a month ago.
Nabors reported revenues of $832.79 million in the last reported quarter, representing a year-over-year change of +13.3%. EPS of -$2.71 for the same period compares with -$4.29 a year ago.
Nabors is expected to post a loss of $2.27 per share for the current quarter, representing a year-over-year change of +32.2%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.8%.
Nabors has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.
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Transocean Ltd. (RIG): Free Stock Analysis Report Nabors Industries Ltd. (NBR): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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