Shares of Transocean LTD (NYSE:RIG) hit a 52-week low of $8.38 on Tuesday, Feb 9, before recovering marginally to close the day’s trading at $8.91.

In fact, shares of this leading offshore driller have had a hard time on the bourse so far this year, with a year-to-date loss of 28% as pressure on oil prices continue and the likes of Transocean grapple with fewer contracts.

With the market dynamic for contract drillers set to worsen, most investors see little reason to hold Transocean stock, let alone buy.

However, a closer look indicates that things might take a turn for the better.

Why Transocean Could Turn Out to Be a Good Buy

With less oil being discovered on land and companies having to dig ever deeper to get to their reserves, Transocean is poised to benefit from a market with robust multi-year demand trends, given its technologically advanced and versatile drilling fleet. In particular, Transocean is the industry leader in deep sea drilling. The company’s state-of-the-art mobile offshore drilling fleets worldwide can function in the most challenging environments, such as the North Sea.

Transocean’s strong backlog, which now stands at an industry-leading $16.9 billion, not only reflects steady demand from its customers but also offers an unmatched level of earnings and cash flow visibility. This enables Transocean to navigate the current uncertain environment better than many of its peers.

Transocean has been able to significantly reduce its operating expenses during the last few quarter. Moreover, the company expects its full-year operating and maintenance cost in the band of $3.7-$3.75 billion, much lower than $5.1 billion and $5.6 billion reported in 2014 and 2013, respectively.

Finally, as Transocean continues to scrap the less-capable rigs and concentrates on early debt retirements rather than make capital investments, its liquidity will improve.

Earnings Beat in the Cards?

Transocean is scheduled to unveil its fourth quarter and full-year 2015 results on Feb 24. We expect the company to report higher-than-expected earnings in the fourth quarter, thereby extending its excellent track record of earnings surprise history having beaten estimates in each of the last four quarters.

The possibility of Transocean beating the Zacks Consensus Estimate in the final quarter of 2015 is high. This is because it possesses the right combination of the two key ingredients – a positive Earnings ESP and a Zacks Rank #1 (Strong), 2 (Buy) or 3 (Hold) – that increases the possibility of an earnings beat. The company has an earnings ESP of +9.46% combined with a favorable Zacks Rank #2.

It is a known fact that an earnings beat more often than not boosts investor confidence in the stock, translating into rapid price appreciation. Therefore, shares of Transocean are likely to get pricey in the event of the company outperforming estimates on Feb 24. Considering this, the current price seems a good entry point for investors. The Zacks Rank #2 carried by the company seems to suggest the same.

Solid Earnings Estimate Revision Activity

What’s more, Transocean is also seeing solid earnings estimate revision activity, which generally translate into rapid price appreciation.

For the to-be-reported quarter, we have seen two estimates moving up in the past 30 days, compared with 1 downward revision. This has caused the Zacks Consensus Estimate for the stock to trend higher, going from 70 cents per share a month ago to its current level of 74 cents.