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Nabors (NBR) Up 71.4% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Nabors Industries (NBR - Free Report) . Shares have added about 71.4% 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 the most recent earnings report in order to get a better handle on the important drivers.
Nabors Reports Narrower-Than-Expected Q3 Loss
Nabors Industries Ltd.’s third-quarter 2020 loss from continuing operations (excluding special items) of $22.81 per share is narrower than the Zacks Consensus Estimate of a loss of $24.63. This outperformance can be attributed to better-than-expected revenues from the Rig Technologies segment, and lower costs and expenses. However, the loss was wider than the year-ago loss of $15.50, primarily due to weak performance at the U.S. drilling and Drilling Solutions segments.
Quarterly revenues of $437.6 million missed the Zacks Consensus Estimate of $451 million and also declined from the year-ago level of $757 million.
Notably, year over year, Nabors’ adjusted EBITDA fell from $207 million to $114.2 million.
Segmental Performance
U.S. Drilling generated quarterly operating revenues of $130.2 million, down 57.7% from the year-ago level of $307.8 million. The segment recorded an operating loss of $39.2 million against the year-ago income of $12.4 million due to a drop in the rig count at Lower 48.
Canadian Drilling’s revenues of $10.8 million in the quarter under review tumbled from the year-ago figure of $12.2 million. However, the segment’s operating loss came in at $3.5 million, narrower than the year-ago quarter’s loss of $5.7 million, attributable to improvement in average daily gross margin as a result of higher average working rig count.
International Drilling’s operational revenues of $248.4 million decreased from the year-ago quarter’s sales of $328.3 million. Moreover, the segmental operating loss came in at $16.9 million in the reported quarter against the prior-year income of $2.5 million due to weak activity across several markets.
Revenues from the Drilling Solutions were 52.9% down to $29.3 million in the third quarter from $62.3 million a year ago and the same further missed the Zacks Consensus Estimate of $31.3 million. Moreover, the unit’s operating loss of $3.6 million came against the year-ago profit of $16.1 million due to diminished activity across service lines and an increased price competition.
Revenues from the Rig Technologies segment plunged 54.9% to $28.5 million from the prior-year level of $63.1 million. However, the metric surpassed the Zacks Consensus Estimate of $26.9 million. Meanwhile, the segment’s operating loss widened to $1.8 million from the prior-year loss of $641 thousand. This downside is due to weak capital equipment sales.
Financials
Total costs and expenses declined to $587.9 million from $832.5 million in the year-ago quarter, reflecting lower depreciation costs, and general and administrative expenses.
As of Sep 30, 2020, the company had $513.8 million in cash and short-term investments, and a long-term debt of $3.3 billion with total debt to total capital of 72.4%.
Nabors generated free cash flow of $9 million in the third quarter.
Guidance
Nabors announced its 2020 capex guidance of $200 million, down from the prior guidance of $240 million. Further, it projects adjusted EBITDA to decline in the fourth quarter as its international rig count is anticipated to fall persistently through the remaining year after decreasing 13% in the third quarter, sequentially.
This Hamilton-based entity’s fourth-quarter average Lower 48 rig count is anticipated to increase by two to four rigs from the third-quarter’s average of 48 rigs. Additionally, the company projects its drilling margins between $8,500 and $9,000, implying the continued impact of soft pricing.
Meanwhile, its Canada Drilling segment estimates its fourth-quarter rig activity to be equal to the third-quarter level. Also, the company expects fourth-quarter adjusted EBITDA for Drilling Solutions and Rig Technologies to remain roughly in line with the third-quarter results.
The company expects to generate free cash flow of nearly $90-$100 million in the fourth quarter.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 5.21% due to these changes.
VGM Scores
At this time, Nabors has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% 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 upward for the stock, and the magnitude of these revisions looks promising. 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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Nabors (NBR) Up 71.4% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Nabors Industries (NBR - Free Report) . Shares have added about 71.4% 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 the most recent earnings report in order to get a better handle on the important drivers.
Nabors Reports Narrower-Than-Expected Q3 Loss
Nabors Industries Ltd.’s third-quarter 2020 loss from continuing operations (excluding special items) of $22.81 per share is narrower than the Zacks Consensus Estimate of a loss of $24.63. This outperformance can be attributed to better-than-expected revenues from the Rig Technologies segment, and lower costs and expenses. However, the loss was wider than the year-ago loss of $15.50, primarily due to weak performance at the U.S. drilling and Drilling Solutions segments.
Quarterly revenues of $437.6 million missed the Zacks Consensus Estimate of $451 million and also declined from the year-ago level of $757 million.
Notably, year over year, Nabors’ adjusted EBITDA fell from $207 million to $114.2 million.
Segmental Performance
U.S. Drilling generated quarterly operating revenues of $130.2 million, down 57.7% from the year-ago level of $307.8 million. The segment recorded an operating loss of $39.2 million against the year-ago income of $12.4 million due to a drop in the rig count at Lower 48.
Canadian Drilling’s revenues of $10.8 million in the quarter under review tumbled from the year-ago figure of $12.2 million. However, the segment’s operating loss came in at $3.5 million, narrower than the year-ago quarter’s loss of $5.7 million, attributable to improvement in average daily gross margin as a result of higher average working rig count.
International Drilling’s operational revenues of $248.4 million decreased from the year-ago quarter’s sales of $328.3 million. Moreover, the segmental operating loss came in at $16.9 million in the reported quarter against the prior-year income of $2.5 million due to weak activity across several markets.
Revenues from the Drilling Solutions were 52.9% down to $29.3 million in the third quarter from $62.3 million a year ago and the same further missed the Zacks Consensus Estimate of $31.3 million. Moreover, the unit’s operating loss of $3.6 million came against the year-ago profit of $16.1 million due to diminished activity across service lines and an increased price competition.
Revenues from the Rig Technologies segment plunged 54.9% to $28.5 million from the prior-year level of $63.1 million. However, the metric surpassed the Zacks Consensus Estimate of $26.9 million. Meanwhile, the segment’s operating loss widened to $1.8 million from the prior-year loss of $641 thousand. This downside is due to weak capital equipment sales.
Financials
Total costs and expenses declined to $587.9 million from $832.5 million in the year-ago quarter, reflecting lower depreciation costs, and general and administrative expenses.
As of Sep 30, 2020, the company had $513.8 million in cash and short-term investments, and a long-term debt of $3.3 billion with total debt to total capital of 72.4%.
Nabors generated free cash flow of $9 million in the third quarter.
Guidance
Nabors announced its 2020 capex guidance of $200 million, down from the prior guidance of $240 million. Further, it projects adjusted EBITDA to decline in the fourth quarter as its international rig count is anticipated to fall persistently through the remaining year after decreasing 13% in the third quarter, sequentially.
This Hamilton-based entity’s fourth-quarter average Lower 48 rig count is anticipated to increase by two to four rigs from the third-quarter’s average of 48 rigs. Additionally, the company projects its drilling margins between $8,500 and $9,000, implying the continued impact of soft pricing.
Meanwhile, its Canada Drilling segment estimates its fourth-quarter rig activity to be equal to the third-quarter level. Also, the company expects fourth-quarter adjusted EBITDA for Drilling Solutions and Rig Technologies to remain roughly in line with the third-quarter results.
The company expects to generate free cash flow of nearly $90-$100 million in the fourth quarter.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 5.21% due to these changes.
VGM Scores
At this time, Nabors has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% 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 upward for the stock, and the magnitude of these revisions looks promising. Notably, Nabors has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.