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Nabors (NBR) Up 1.1% Since Last Earnings Report: Can It Continue?
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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 1.1% in that time frame, underperforming 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 drivers.
Nabors Q4 Earnings Improve Y/Y, Sales Miss Estimates
Nabors Industries reported a fourth-quarter 2023 loss per share of $2.7 per share, narrower than the year-ago quarter’s reported loss of $7.87. This was primarily due to much lower year-over-year total costs and expenses.
Revenues of $737.1 million missed the Zacks Consensus Estimate of $750 million. The top line also decreased from the year-ago quarter’s level of $769.3 million. This was due to poor contribution from NBR’s U.S. Drilling and Rig Technologies segments.
Adjusted EBITDA slightly increased to $230.1 million from $230 million recorded a year ago. The amount is lower than our model estimates of $231 million.
Segmental Performances
U.S. Drilling generated operating revenues of $265.8 million, down 20.2% from the year-ago quarter’s level of $332.9 million. The figure also missed the Zacks Consensus Estimate of $275.8 million. Operating profit totaled $51.5 million compared with the prior-year quarter’s level of $68.3 million. The figure is slightly lower than our estimated profit of $51.6 million.
International Drilling’s operational revenues of $342.8 million increased from the year-ago quarter’s level of $317.6 million, attributed to the commencement of operations by several rigs. The unit’s top line also missed our estimate of $369.3 million. Operating profit totaled $18.6 million compared with the prior-year quarter’s level of $1.8 million. The figure is higher than our estimated profit of $6.6 million.
Revenues from the Drilling Solutions segment totaled $77 million, up 8% from $71.3 million recorded in the prior-year quarter. The top line also beat our estimate of $71.5 million, driven by the efficient performance of drilling software and digitalization product lines. Additionally, the unit’s operating income of $30.1 million was higher than the year-ago quarter’s figure of $24.8 million. However, it was lower than our projection of $48.8 million.
Revenues from Rig Technologies totaled $59.3 million, decreased about 5.6% from the prior-year quarter’s level of $62.8 million. The metric beat our projection of $45 million. The segment’s operating profit totaled $5.8 million compared with the prior-year quarter’s level of $2.1 million. The figure is lower than our projection of $6.5 million.
Financial Position
Nabors’ total costs and expenses decreased to $714.7 million from $801.3 millionrecorded in the year-ago quarter, reflecting higher research and engineering and interest expenses. Additionally, the amount is lower than our prediction of $764.5 million.
As of Dec 31, 2023, NBR had $1.1 billion in cash and short-term investments. Long-term debt was about $2.4 billion, with a total debt-to-total capital of 82.2%.
Nabors generated a negative free cash flow of $52 million in the fourth quarter of 2023.
Guidance
Nabors expects the average rig count in the U.S. drilling segment to be in the range of 73-75 for the first quarter of 2024. It also anticipates the daily margin to be $15,300 during the same time frame. Adjusted EBITDA for Alaska and the Gulf of Mexico is estimated to be between $1.5 million and $2.0 million.
For the International Drilling segment, the daily drilling margin in the first quarter of 2024 is expected to be in the band of $16,100-$16,300, with approximately two rigs in operation.
In terms of financial performance, Nabors expects Drilling Solutions and Rig Technologies to generate Adjusted EBITDA in the range of $30-$31 million and $5-$6 million, respectively, for the first quarter of 2024.
Furthermore, Nabors anticipates capital expenditures in the band of $170-$180 million for the quarter, with approximately $50 million reserved for newbuilds in Saudi Arabia.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -108.63% 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 downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Nabors has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Nabors (NBR) Up 1.1% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Nabors Industries (NBR - Free Report) . Shares have added about 1.1% in that time frame, underperforming 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 drivers.
Nabors Q4 Earnings Improve Y/Y, Sales Miss Estimates
Nabors Industries reported a fourth-quarter 2023 loss per share of $2.7 per share, narrower than the year-ago quarter’s reported loss of $7.87. This was primarily due to much lower year-over-year total costs and expenses.
Revenues of $737.1 million missed the Zacks Consensus Estimate of $750 million. The top line also decreased from the year-ago quarter’s level of $769.3 million. This was due to poor contribution from NBR’s U.S. Drilling and Rig Technologies segments.
Adjusted EBITDA slightly increased to $230.1 million from $230 million recorded a year ago. The amount is lower than our model estimates of $231 million.
Segmental Performances
U.S. Drilling generated operating revenues of $265.8 million, down 20.2% from the year-ago quarter’s level of $332.9 million. The figure also missed the Zacks Consensus Estimate of $275.8 million. Operating profit totaled $51.5 million compared with the prior-year quarter’s level of $68.3 million. The figure is slightly lower than our estimated profit of $51.6 million.
International Drilling’s operational revenues of $342.8 million increased from the year-ago quarter’s level of $317.6 million, attributed to the commencement of operations by several rigs. The unit’s top line also missed our estimate of $369.3 million. Operating profit totaled $18.6 million compared with the prior-year quarter’s level of $1.8 million. The figure is higher than our estimated profit of $6.6 million.
Revenues from the Drilling Solutions segment totaled $77 million, up 8% from $71.3 million recorded in the prior-year quarter. The top line also beat our estimate of $71.5 million, driven by the efficient performance of drilling software and digitalization product lines. Additionally, the unit’s operating income of $30.1 million was higher than the year-ago quarter’s figure of $24.8 million. However, it was lower than our projection of $48.8 million.
Revenues from Rig Technologies totaled $59.3 million, decreased about 5.6% from the prior-year quarter’s level of $62.8 million. The metric beat our projection of $45 million. The segment’s operating profit totaled $5.8 million compared with the prior-year quarter’s level of $2.1 million. The figure is lower than our projection of $6.5 million.
Financial Position
Nabors’ total costs and expenses decreased to $714.7 million from $801.3 millionrecorded in the year-ago quarter, reflecting higher research and engineering and interest expenses. Additionally, the amount is lower than our prediction of $764.5 million.
As of Dec 31, 2023, NBR had $1.1 billion in cash and short-term investments. Long-term debt was about $2.4 billion, with a total debt-to-total capital of 82.2%.
Nabors generated a negative free cash flow of $52 million in the fourth quarter of 2023.
Guidance
Nabors expects the average rig count in the U.S. drilling segment to be in the range of 73-75 for the first quarter of 2024. It also anticipates the daily margin to be $15,300 during the same time frame. Adjusted EBITDA for Alaska and the Gulf of Mexico is estimated to be between $1.5 million and $2.0 million.
For the International Drilling segment, the daily drilling margin in the first quarter of 2024 is expected to be in the band of $16,100-$16,300, with approximately two rigs in operation.
In terms of financial performance, Nabors expects Drilling Solutions and Rig Technologies to generate Adjusted EBITDA in the range of $30-$31 million and $5-$6 million, respectively, for the first quarter of 2024.
Furthermore, Nabors anticipates capital expenditures in the band of $170-$180 million for the quarter, with approximately $50 million reserved for newbuilds in Saudi Arabia.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -108.63% 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 downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Nabors has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.