The Zacks Analyst Blog Highlights: Transocean, Transocean Partners, Pacific Coast Oil Trust and Crescent Point Energy

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Nov 06, 2014, 09:30 ET

CHICAGO, Nov. 6, 2014 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Transocean Ltd. (NYSE:RIG-Free Report), Transocean Partners LLC (NYSE:RIGP-Free Report), Pacific Coast Oil Trust (NYSE:ROYT-Free Report) and Crescent Point Energy Corp. (NYSE:CPG-Free Report).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Wednesday's Analyst Blog:

Can Transocean (RIG) Continue Its Earnings Momentum?

We expect Vernier, Switzerland-based offshore drilling powerhouse Transocean Ltd. (NYSE:RIG-Free Report) to beat expectations when it reports third-quarter 2014 results after the closing bell on Thursday, Nov 6.

In the preceding three-month period, Transocean delivered a positive 47.71% earnings surprise. In fact, the company has outpaced the Zacks Consensus Estimate in all of the past four quarters, with an average beat of 30.34%. Let's see how things are shaping up for this announcement.

Why a Likely Positive Surprise?

Our proven model shows that Transocean is likely to beat earnings in the to-be-reported quarter because it has the right combination of two key ingredients.

Positive Zacks ESP: Earnings ESP (Expected Surprise Prediction), which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, stands at +3.90%. This is because the Most Accurate estimate stands at 80 cents, whereas the Zacks Consensus Estimate is pegged lower at 77 cents.

Zacks Rank #3 (Hold): The combination of Transocean's Zacks Rank #3 and +3.90% ESP makes us confident of an earnings beat this season.

Note that stocks with Zacks Ranks of #1, 2 and 3 have a significantly higher chance of beating earnings. The Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.

What Will Drive the Better-than-Expected Earnings?

No stranger to beating earnings estimates, Transocean is likely to outperform yet again in the third quarter.

Firstly, with two brand new ultra deepwater drillships – Asgard and Invictus – commencing work in the July-August timeframe, revenues would definitely get a boost.

Secondly, Transocean expects a significantly lower operating cost in the quarter vis-a-vis a year ago, which is expected to drive its bottom line to a great extent.

Lastly, inflows from the Transocean Partners LLC (NYSE:RIGP-Free Report) IPO and proceeds from the GSF Magellan high-specification jackup rig sale are likely to improve cash flows.

Other Stocks to Consider

Transocean is not the only company looking up this earnings season. We see likely earnings beats coming from these energy firms as well:

Pacific Coast Oil Trust (NYSE:ROYT-Free Report) has an Earnings ESP of +8.11% and holds a Zacks Rank #2 (Buy).

Crescent Point Energy Corp. (NYSE:CPG-Free Report) has an Earnings ESP of +20.93% and holds a Zacks Rank #2.

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

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