Thursday, 27 February 2014

RIG - an earnings miss

Transocean (RIG) missed slightly for Q4/full year earnings, with an early morning decline of -3% (intraday low: $41.44). Despite a latter day recovery, closing -1.1% @ $42.55, RIG is well below the old busted key support zone of $50/47.

RIG, daily

RIG, weekly


The Oil and Gas sector is one of the most unloved sectors in market land. Whilst profit less stocks like AMZN and TWTR continue to gain, the heavy industrial companies - such as Transocean and Seadrill, remain under constant downside pressure.

The bigger weekly chart for RIG is especially lousy, and we have a possible large multi-week bear flag developing.

With a forward PE of just 7, RIG is - on some level, undervalued by at least 30/50%, but as ever...'it is...what it is.

see key stats@ Yahoo! finance

For now, from a pure price perspective, RIG is a broken stock, and looks vulnerable to slipping into the 30s. If the main market does see a (however brief) multi-month decline this late spring/summer, then RIG will surely continue to fall.

I have even seen talk of an eventual floor in the 20s - which is indeed where it has floored a few times in the past decade. Yet..the low 20s is another 50% lower, and that would give a PE of 6/4.

Crazy market...crazy prices.