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Transocean (RIG) Beats Earnings For Quarter

Aug 04 2010

Transocean (RIG) Beats Earnings For Quarter

Transocean (RIG) announced their earnings for the quarter ending in June after-hours tonight and beat analyst estimates depending on considerations. The consensus estimate was $1.68 per share while the company actually earned $2.22 a share. Revenue was soft for the off shore drilling company. They brought in $2.5 billion in revenue while the street was expecting $2.56 billion. This was down from the same quarter last year when revenue was $2.88 billion. Shares rallied throughout the day in addition to the days leading up to the announcement. The stock is up slightly after the announcement.

The company lost it’s oil rig in the Gulf of Mexico when BP allowed a blowout to occur that resulted in a major oil spill in the area. The company owns 14 other rigs in the gulf which have not been operating since the spill occurred. Costs from legal expenses required due to the spill were a drag on earnings for the quarter. The company has delayed its dividend until legal issues are resolved with the Swiss government.

With the oil spill largely resolved, Transocean is considered the stock with the most upside of all the companies involved. Prior to the spill, Transocean traded at a high of $92 a share. The stock has now traded in a range from $42.58 to $54.70 with the closing price today of $53.36.A rally above that range would signal a buying opportunity. Analysts should be increasing future earnings estimates in the near future, building a long position at this time would be an attractive trade.

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