Analyzing USA Compression Partners (NYSE:USAC) & Transocean (NYSE:RIG)

USA Compression Partners (NYSE:USAC) and Transocean (NYSE:RIG) are both mid-cap energy companies, but which is the better business? We will contrast the two businesses based on the strength of their institutional ownership, valuation, dividends, earnings, analyst recommendations, profitability and risk.

Analyst Recommendations

This is a summary of recent ratings for USA Compression Partners and Transocean, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
USA Compression Partners	0	5	0	1	2.33
Transocean	3	4	3	2	2.33

USA Compression Partners presently has a consensus target price of $29.50, suggesting a potential upside of 17.20%. Transocean has a consensus target price of $6.68, suggesting a potential downside of 0.25%. Given USA Compression Partners’ higher probable upside, equities research analysts clearly believe USA Compression Partners is more favorable than Transocean.

Volatility and Risk

USA Compression Partners has a beta of 0.28, meaning that its stock price is 72% less volatile than the S&P 500. Comparatively, Transocean has a beta of 1.41, meaning that its stock price is 41% more volatile than the S&P 500.

Profitability

This table compares USA Compression Partners and Transocean’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
USA Compression Partners	12.43%	179.77%	4.83%
Transocean	-40.24%	2.60%	1.37%

Institutional and Insider Ownership

47.8% of USA Compression Partners shares are owned by institutional investors. Comparatively, 67.7% of Transocean shares are owned by institutional investors. 9.7% of Transocean shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Valuation and Earnings

This table compares USA Compression Partners and Transocean”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
USA Compression Partners	$1.18 billion	3.10	$111.32 million	$1.06	23.75
Transocean	$3.96 billion	1.89	-$2.92 billion	($1.88)	-3.56

USA Compression Partners has higher earnings, but lower revenue than Transocean. Transocean is trading at a lower price-to-earnings ratio than USA Compression Partners, indicating that it is currently the more affordable of the two stocks.

Summary

USA Compression Partners beats Transocean on 8 of the 14 factors compared between the two stocks.

About USA Compression Partners

USA Compression Partners, LP provides compression services under term contracts with customers in the natural gas and crude oil industries in the United States. The company engineers, designs, operates, services, and repairs its compression units; and maintains related support inventory and equipment. It also provides compression services in various shale plays, including the Utica, Marcellus, Permian Basin, Delaware Basin, Eagle Ford, Mississippi Lime, Granite Wash, Woodford, Barnett, Haynesville, Niobrara, and Fayetteville shales. As of December 31, 2017, the company had approximately 1,799,781 horsepower in its fleet. It serves oil companies; and independent producers, processors, gatherers, and transporters of natural gas and crude oil. USA Compression GP, LLC operates as the general partner of USA Compression Partners, LP. The company was formerly known as Compression Holdings, LP, and changed its name to USA Compression Partners, LP in June 2011. USA Compression Partners, LP was founded in 1998 and is headquartered in Austin, Texas.

About Transocean

Transocean Ltd., together with its subsidiaries, provides offshore contract drilling services for oil and gas wells worldwide. It contracts mobile offshore drilling rigs, related equipment, and work crews to drill oil and gas wells. The company operates a fleet of mobile offshore drilling units, consisting of ultra-deepwater floaters and harsh environment floaters. It serves integrated energy companies, government-owned or government-controlled energy companies, and other independent energy companies. The company was founded in 1926 and is based in Steinhausen, Switzerland.