Transocean (NYSE:RIG), an offshore drilling company, has faced a 45% decline in its stock over the past twelve months, contrasting sharply with the S&P 500, which saw a 12% increase. The company’s financial losses are compounded by rising cost inflation, and a further economic slowdown is expected to dampen demand for oil and gas exploration projects. As of June 10, 2025, Transocean’s debt stood at $6.6 billion against a market capitalization of $2.7 billion, resulting in a Debt-to-Equity Ratio of 244%, significantly higher than the S&P 500’s 19.9%.
Despite a notable revenue growth averaging 11.7% annually over the past three years, where revenues increased from $2.9 billion to $3.7 billion in the last twelve months, Transocean’s profitability remains critically weak. The company’s recent operating loss totaled $728 million, leading to a Net Income Margin of -19.9%, while its operating margin of 11.7% lags behind the S&P 500’s 13.2%. Furthermore, in the last quarter, Transocean reported revenues of $906 million, marking an 18.7% increase year-over-year.
Looking ahead, Transocean’s outlook appears bleak due to poor profitability, substantial debt, and its vulnerability during market downturns. The company is also expected to incur a $1.2 billion impairment charge in Q2 for disposing of two rigs as part of its fleet streamlining efforts. Overall, investors are advised to consider lower-risk alternatives, given the escalating risks tied to fossil fuel-dependent companies amidst growing regulatory pressures and a shift towards renewable energy.
