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Nabors (NBR) Down 6.7% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Nabors Industries (NBR - Free Report) . Shares have lost about 6.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Nabors due for a breakout? 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 drivers.
Nabors Posts Wider Loss, Sales Beat Estimates in Q3
Nabors Industries reported a third-quarter 2022 loss from continuing operations of $5.54 per share, wider than the Zacks Consensus Estimate of a loss of $3.71. This underperformance was primarily due to much higher year-over-year total costs and expenses.
However, the loss was narrower than the year-ago loss of $14.16 per share due to better-than-expected sales from the U.S. Drilling unit, Rig Technologies, International Drilling and the Drilling Solutions segment.
Quarterly revenues of $698.9 million beat the Zacks Consensus Estimate of $679 million due to better-than-expected performances in some of NBR’s segments. The top line improved from the year-ago level of $524.4 million.
Nabors’ adjusted EBITDA rose from $125.2 million to $190.8 million year over year.
Segmental Performances
U.S. Drilling generated quarterly operating revenues of $297.2 million, up 71.3% from the year-ago level of $173.4 million, surpassing the Zacks Consensus Estimate of $289 million due to an increase in the rig count. The segment recorded an operating income of $37.8 million, comparing favorably to the year-ago loss of $19.7 million.
International Drilling’s operational revenues of $306.3 million increased from the year-ago quarter’s sales of $270 million due to the improved performance in Saudi Arabia and Latin America. This boosted growth and the international rig count increased slightly compared to the prior quarter. Moreover, the unit’s sales beat the Zacks Consensus Estimate of $302 million. The segmental operating loss came in at $907,000 in the reported quarter, improving from the prior-year quarter’s loss of $7.3 million.
Revenues from the Drilling Solutions segment rose 35% to $61.9 million in the third quarter from about $45.9 million a year ago. Moreover, the same outperformed the Zacks Consensus Estimate of $60 million. Additionally, the segment’s operating income of $20.1 million beat the year-ago figure of $8.6 million.
Revenues from Rig Technologies increased about 320% to $50.5 million from the prior-year level of $42 million. The metric beat the Zacks Consensus Estimate of $47.97 million, primarily due to higher capital equipment sales in the reported quarter. Moreover, the segment’s operating profit came in at $3.4 million compared with the prior-year profit of $1.9 million.
Financial Position
Nabors’ total costs and expenses increased to $691 million from $637.3 million in the year-ago quarter, reflecting much higher direct expenses, general and administrative costs, and research and engineering expenses, along with slightly higher interest expenses.
As of Sep 30, 2022, NBR had $425 million in cash and short-term investments and long-term debt of about $2.58 billion, with a total debt-to-total capital of 81.3%.
Nabors generated free cash flow of $35.3 million in the third quarter of 2022.
Guidance
Nabors’ fourth-quarter 2022 average lower 48 rig count is expected to increase by around four to five rigs over the third-quarter average. Meanwhile, the daily margin is predicted in the $13,400-$13,600 range.
This Hamilton-based entity’s International Drilling segment’s fourth-quarter 2022 daily drilling margin is anticipated at approximately $14,900, with the average rig count up approximately one rig compared to the third-quarter average.
Nabors expects fourth-quarter 2022 EBITDA for Drilling Solutions of 15% over the third-quarter level. Finally, the adjusted EBITDA for NBR’s Rig Technologies segment is estimated to be up approximately $2 million over the third-quarter level.
The capital expenditure for the fourth quarter of 2022 is expected in the range of $100-$120 million, with the full-year 2022 CAPEX still estimated at approximately between $380 and 400 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision flatlined during the past month.
The consensus estimate has shifted -45.99% due to these changes.
VGM Scores
Currently, Nabors has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, 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
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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Nabors (NBR) Down 6.7% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Nabors Industries (NBR - Free Report) . Shares have lost about 6.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Nabors due for a breakout? 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 drivers.
Nabors Posts Wider Loss, Sales Beat Estimates in Q3
Nabors Industries reported a third-quarter 2022 loss from continuing operations of $5.54 per share, wider than the Zacks Consensus Estimate of a loss of $3.71. This underperformance was primarily due to much higher year-over-year total costs and expenses.
However, the loss was narrower than the year-ago loss of $14.16 per share due to better-than-expected sales from the U.S. Drilling unit, Rig Technologies, International Drilling and the Drilling Solutions segment.
Quarterly revenues of $698.9 million beat the Zacks Consensus Estimate of $679 million due to better-than-expected performances in some of NBR’s segments. The top line improved from the year-ago level of $524.4 million.
Nabors’ adjusted EBITDA rose from $125.2 million to $190.8 million year over year.
Segmental Performances
U.S. Drilling generated quarterly operating revenues of $297.2 million, up 71.3% from the year-ago level of $173.4 million, surpassing the Zacks Consensus Estimate of $289 million due to an increase in the rig count. The segment recorded an operating income of $37.8 million, comparing favorably to the year-ago loss of $19.7 million.
International Drilling’s operational revenues of $306.3 million increased from the year-ago quarter’s sales of $270 million due to the improved performance in Saudi Arabia and Latin America. This boosted growth and the international rig count increased slightly compared to the prior quarter. Moreover, the unit’s sales beat the Zacks Consensus Estimate of $302 million. The segmental operating loss came in at $907,000 in the reported quarter, improving from the prior-year quarter’s loss of $7.3 million.
Revenues from the Drilling Solutions segment rose 35% to $61.9 million in the third quarter from about $45.9 million a year ago. Moreover, the same outperformed the Zacks Consensus Estimate of $60 million. Additionally, the segment’s operating income of $20.1 million beat the year-ago figure of $8.6 million.
Revenues from Rig Technologies increased about 320% to $50.5 million from the prior-year level of $42 million. The metric beat the Zacks Consensus Estimate of $47.97 million, primarily due to higher capital equipment sales in the reported quarter. Moreover, the segment’s operating profit came in at $3.4 million compared with the prior-year profit of $1.9 million.
Financial Position
Nabors’ total costs and expenses increased to $691 million from $637.3 million in the year-ago quarter, reflecting much higher direct expenses, general and administrative costs, and research and engineering expenses, along with slightly higher interest expenses.
As of Sep 30, 2022, NBR had $425 million in cash and short-term investments and long-term debt of about $2.58 billion, with a total debt-to-total capital of 81.3%.
Nabors generated free cash flow of $35.3 million in the third quarter of 2022.
Guidance
Nabors’ fourth-quarter 2022 average lower 48 rig count is expected to increase by around four to five rigs over the third-quarter average. Meanwhile, the daily margin is predicted in the $13,400-$13,600 range.
This Hamilton-based entity’s International Drilling segment’s fourth-quarter 2022 daily drilling margin is anticipated at approximately $14,900, with the average rig count up approximately one rig compared to the third-quarter average.
Nabors expects fourth-quarter 2022 EBITDA for Drilling Solutions of 15% over the third-quarter level. Finally, the adjusted EBITDA for NBR’s Rig Technologies segment is estimated to be up approximately $2 million over the third-quarter level.
The capital expenditure for the fourth quarter of 2022 is expected in the range of $100-$120 million, with the full-year 2022 CAPEX still estimated at approximately between $380 and 400 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision flatlined during the past month.
The consensus estimate has shifted -45.99% due to these changes.
VGM Scores
Currently, Nabors has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, 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
Nabors has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.