Transocean Development Driller III

Transocean Growing Profile ($RIG)

Transocean has a lot going on right now. This can be a strength but also a weakness. Let’s look to Rex Moore for the details of the stock and where it may be going.

Intangible assets ratio
This ratio shows us the percentage of total assets made up by goodwill and other intangibles. Heiserman says he views anything over 20% as worrisome, “because management might be overpaying for the acquisition or acquisitions that gave rise to the goodwill.”

Transocean has an intangible assets ratio of 9%.

This is down from 22% last quarter. The reason? The company wrote off a large amount of goodwill when it announced earnings in February. At this point, then, the company’s goodwill and intangibles are a much more reasonable percentage of total assets.

But we’re not through; let’s also take a look at tangible book value.

Tangible book value
Tangible book value is simply what remains after subtracting goodwill and other intangibles from shareholders’ equity. If this is not a positive value, Heiserman advises you to run away because such companies may “lack the balance sheet muscle to protect themselves in a recession or from better-financed competitors.”

Transocean’s tangible book value is $12.7 billion, so no yellow flags here.

RIG

Be sure to run through all your checks and balances before investing. It looks like they are on a good track, but there are many more things to account for. Keep up that research! 

Quotes taken from report by Rex Moore, Read the entire article here.

Photo Credit: http://marketplayground.com/2011/12/07/has-transocean-nyserig-bottomed/

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