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Is it Worth Holding Weatherford (WFT) in Your Portfolio?
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We issued an updated research report on leading oilfield services provider Weatherford International plc on Apr 6, 2017. We appreciate the company’s cost-cutting initiatives like workforce reduction as well as consolidating facilities to counter oil price weakness. However, the company’s earnings surprise history is disappointing.
We believe that Weatherford's medium-term revenue growth will outpace peers, supported by its recovering margins and growing presence in the relatively stable markets of the Eastern Hemisphere. We also remain optimistic about the company’s performance in North America, given its exposure to the prolific oil and gas shales and improved pricing across several product lines.
Weatherford is aligning its organizational structure to keep up with the changing market conditions. This, in turn, should greatly aid the financials. In fact, the company achieved cost savings of $601 million during 2016.
In the last six months, Weatherford’s stock outperformed the Zacks categorized Oil Field Machinery & Equipment industry. During the aforesaid period, the company’s shares gained 6.2% compared with nearly 3% decrease for the broader industry.
In the fourth quarter of 2016, however, both the top line and bottom line of the company underperformed on a year-over-year basis. Moreover, Weatherford missed the Zacks Consensus Estimate in two of the last four quarters with an average negative earnings surprise of 16.09%.
Weatherford’s debt-heavy balance sheet, its incapability to generate strong free cash flow as well as competition from larger peers are negatives. As of Dec 31, 2016, the company had cash balance of only $1,037 million compared with a huge long-term debt of $7,403 million. Also, free cash flow during the entire last year was ($430 million) compared with $61 million a year earlier.
Stocks to Consider
Some better-ranked players in the energy sector include Antero Resources Corporation (AR - Free Report) , Pioneer Natural Resources Company (PXD - Free Report) and Energy Transfer Equity, L.P. . Antero Resources and Pioneer Natural sport a Zacks Rank #1 (Strong Buy), while Energy Transfer carries a Zacks Rank #2 (Buy).
Antero Resources’ earnings beat The Zacks Consensus Estimate in all the prior four quarters with an average positive earnings surprise of 239.10%.
Pioneer Natural’s earnings surpassed the Zacks Consensus Estimate in three of the prior four quarters with an average positive earnings surprise of 21.86%.
Energy Transfer is expected to witness year-over-year earnings growth of 42.12% in 2017.
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Is it Worth Holding Weatherford (WFT) in Your Portfolio?
We issued an updated research report on leading oilfield services provider Weatherford International plc on Apr 6, 2017. We appreciate the company’s cost-cutting initiatives like workforce reduction as well as consolidating facilities to counter oil price weakness. However, the company’s earnings surprise history is disappointing.
The company currently carries a Zacks Rank #3 (Hold), implying that the stock will perform in line with the broader U.S. equity market over the next one to three months.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
We believe that Weatherford's medium-term revenue growth will outpace peers, supported by its recovering margins and growing presence in the relatively stable markets of the Eastern Hemisphere. We also remain optimistic about the company’s performance in North America, given its exposure to the prolific oil and gas shales and improved pricing across several product lines.
Weatherford is aligning its organizational structure to keep up with the changing market conditions. This, in turn, should greatly aid the financials. In fact, the company achieved cost savings of $601 million during 2016.
In the last six months, Weatherford’s stock outperformed the Zacks categorized Oil Field Machinery & Equipment industry. During the aforesaid period, the company’s shares gained 6.2% compared with nearly 3% decrease for the broader industry.
In the fourth quarter of 2016, however, both the top line and bottom line of the company underperformed on a year-over-year basis. Moreover, Weatherford missed the Zacks Consensus Estimate in two of the last four quarters with an average negative earnings surprise of 16.09%.
Weatherford’s debt-heavy balance sheet, its incapability to generate strong free cash flow as well as competition from larger peers are negatives. As of Dec 31, 2016, the company had cash balance of only $1,037 million compared with a huge long-term debt of $7,403 million. Also, free cash flow during the entire last year was ($430 million) compared with $61 million a year earlier.
Stocks to Consider
Some better-ranked players in the energy sector include Antero Resources Corporation (AR - Free Report) , Pioneer Natural Resources Company (PXD - Free Report) and Energy Transfer Equity, L.P. . Antero Resources and Pioneer Natural sport a Zacks Rank #1 (Strong Buy), while Energy Transfer carries a Zacks Rank #2 (Buy).
Antero Resources’ earnings beat The Zacks Consensus Estimate in all the prior four quarters with an average positive earnings surprise of 239.10%.
Pioneer Natural’s earnings surpassed the Zacks Consensus Estimate in three of the prior four quarters with an average positive earnings surprise of 21.86%.
Energy Transfer is expected to witness year-over-year earnings growth of 42.12% in 2017.
Zacks’ Best Private Investment Ideas
While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public. Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Click here for Zacks' private trades >>