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Why Is Nabors (NBR) Up 29.5% Since Last Earnings Report?
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It has been about a month since the last earnings report for Nabors Industries (NBR - Free Report) . Shares have added about 29.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Nabors due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Nabors Posts Wider-Than-Expected Q4 Loss, Sales Miss Too
Nabors Industries reported a fourth-quarter 2021 loss from continuing operations of $14.60 per share, wider than the Zacks Consensus Estimate of a loss of $10.98. This underperformance was primarily due to higher year-over-year total costs and expenses.
However, the loss was narrower than the year-ago loss of $23.82 per share due to better-than-expected sales from the U.S Drilling unit, Drilling Solutions unit, and the Rig Technologies unit.
Quarterly revenues of $543.69 million missed the Zacks Consensus Estimate of $551 million. However, the top line improved from the year-ago level of $446.74 million.
Nabors’ adjusted EBITDA rose from $108.1 million to $131.6 million year over year.
Segment Performances
U.S. Drilling generated quarterly operating revenues of $192.3 million, up 43.4% from the year-ago level of $134.1 million, substantially surpassing the Zacks Consensus Estimate of $173 million due to an increase in rig count. The segment recorded an operating loss of $12.6 million, narrower than the year-ago loss of $26.2 million.
International Drilling’s operational revenues of $271 million increased from the year-ago quarter’s sales of $245 million on higher rig activity in Latin American markets. However, the unit’s sales missed the Zacks Consensus Estimate of $285 million. The segmental operating loss came in at $5.7 million in the reported quarter, narrower than the prior-year quarter’s loss of $35.5 million.
Revenues from the Drilling Solutions segment rose 61.9% to $51.8 million in the fourth quarter from about $32 million a year ago. The same outpaced the Zacks Consensus Estimate of $49.3 million due to increased acceptance of NBR’s product lines in the United States and international markets. Additionally, the unit’s operating income of $12.9 million turned around from the year-ago loss of $2.5 million.
Rig Technologies revenues increased 71.2% to $46.9 million from the prior-year level of $27.4 million. The metric also surpassed the Zacks Consensus Estimate of $44 million for increased aftermarket sales. Moreover, the segment’s operating income came in at $1.5 million against the prior-year loss of $2 million.
Financial Position
Nabors’ total costs and expenses increased to $634.6 million from $511.8 million in the year-ago quarter, reflecting higher general & administrative costs and much higher direct expenses.
As of Dec 31, 2021, the company had $991.5 million in cash and short-term investments and long-term debt of about $3.3 billion with total debt-to-total capital of 81.9%.
Nabors generated free cash flow of $50.1 million in the fourth quarter and $311.6 million during full-year 2021.
Guidance
Nabors’ first-quarter 2022 average Lower 48 rig count is expected to increase by around 9-10 over the fourth-quarter average, while the daily margin is predicted between $7,500 and $7,600.
This Hamilton-based entity’s International Drilling segment’s first-quarter 2022 daily drilling margin is anticipated at around $13,000, with the number of rigs essentially unchanged sequentially. The company expects first-quarter 2022 EBITDA for Drilling Solutions to be approximately equal to the December 2021 quarter level. Finally, adjusted EBITDA for NBR’s Rig Technologies segment should at least break even.
Capital expenditure for the first quarter of 2022 is to be in the range of $95 million-$100 million, with approximately $35 million for SANAD newbuilds.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
Currently, Nabors has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Nabors has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Nabors (NBR) Up 29.5% Since Last Earnings Report?
It has been about a month since the last earnings report for Nabors Industries (NBR - Free Report) . Shares have added about 29.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Nabors due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Nabors Posts Wider-Than-Expected Q4 Loss, Sales Miss Too
Nabors Industries reported a fourth-quarter 2021 loss from continuing operations of $14.60 per share, wider than the Zacks Consensus Estimate of a loss of $10.98. This underperformance was primarily due to higher year-over-year total costs and expenses.
However, the loss was narrower than the year-ago loss of $23.82 per share due to better-than-expected sales from the U.S Drilling unit, Drilling Solutions unit, and the Rig Technologies unit.
Quarterly revenues of $543.69 million missed the Zacks Consensus Estimate of $551 million. However, the top line improved from the year-ago level of $446.74 million.
Nabors’ adjusted EBITDA rose from $108.1 million to $131.6 million year over year.
Segment Performances
U.S. Drilling generated quarterly operating revenues of $192.3 million, up 43.4% from the year-ago level of $134.1 million, substantially surpassing the Zacks Consensus Estimate of $173 million due to an increase in rig count. The segment recorded an operating loss of $12.6 million, narrower than the year-ago loss of $26.2 million.
International Drilling’s operational revenues of $271 million increased from the year-ago quarter’s sales of $245 million on higher rig activity in Latin American markets. However, the unit’s sales missed the Zacks Consensus Estimate of $285 million. The segmental operating loss came in at $5.7 million in the reported quarter, narrower than the prior-year quarter’s loss of $35.5 million.
Revenues from the Drilling Solutions segment rose 61.9% to $51.8 million in the fourth quarter from about $32 million a year ago. The same outpaced the Zacks Consensus Estimate of $49.3 million due to increased acceptance of NBR’s product lines in the United States and international markets. Additionally, the unit’s operating income of $12.9 million turned around from the year-ago loss of $2.5 million.
Rig Technologies revenues increased 71.2% to $46.9 million from the prior-year level of $27.4 million. The metric also surpassed the Zacks Consensus Estimate of $44 million for increased aftermarket sales. Moreover, the segment’s operating income came in at $1.5 million against the prior-year loss of $2 million.
Financial Position
Nabors’ total costs and expenses increased to $634.6 million from $511.8 million in the year-ago quarter, reflecting higher general & administrative costs and much higher direct expenses.
As of Dec 31, 2021, the company had $991.5 million in cash and short-term investments and long-term debt of about $3.3 billion with total debt-to-total capital of 81.9%.
Nabors generated free cash flow of $50.1 million in the fourth quarter and $311.6 million during full-year 2021.
Guidance
Nabors’ first-quarter 2022 average Lower 48 rig count is expected to increase by around 9-10 over the fourth-quarter average, while the daily margin is predicted between $7,500 and $7,600.
This Hamilton-based entity’s International Drilling segment’s first-quarter 2022 daily drilling margin is anticipated at around $13,000, with the number of rigs essentially unchanged sequentially. The company expects first-quarter 2022 EBITDA for Drilling Solutions to be approximately equal to the December 2021 quarter level. Finally, adjusted EBITDA for NBR’s Rig Technologies segment should at least break even.
Capital expenditure for the first quarter of 2022 is to be in the range of $95 million-$100 million, with approximately $35 million for SANAD newbuilds.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
Currently, Nabors has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Nabors has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.