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Why Is Noble (NE) Down 18% Since the Last Earnings Report?

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A month has gone by since the last earnings report for Noble Corporation (NE - Free Report) . Shares have lost about 18% in that time frame, underperforming the market.

Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? 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.

Second-Quarter 2017 Results

Noble Corporation reported second-quarter 2017 loss of 31 cents per share, narrower than the Zacks Consensus Estimate of a loss of 33 cents. The reported figure compared unfavorably with the year-ago quarter’s earnings of 1 cent per share. Lower rig utilization and lower average dayrates contributed to the decline.

Total revenue in the quarter declined to $278.1 million from $894.8 million in the last-year comparable quarter. Contract Drilling Services contributed $271.5 million to total revenue, down 69% year over year.
 
Second-Quarter Operating Highlights

Net loss from continuing operations was $96.2 million, which compared unfavorably with a net income of $345.4 million in the second quarter of 2016. Total rig utilization remained unchanged at 65%. The average dayrate declined to $164,475 from $509,145 in the year-ago quarter.

The average dayrate for Drillships of $309,313 was also lower than $1,134,011 a year ago. Average capacity utilization decreased to 52% from 86% in the year-ago quarter.

The average dayrate for the company's jackups was $121,284 compared with $136,041 in the prior-year quarter. Average capacity utilization increased to 93% from the year-ago level of 83%.

The average dayrate for the company's semisubmersibles was $126,106 compared with $290,106 in the prior-year quarter. Average capacity utilization increased to 17% from the year-ago level of 16%.

As of Jun 30, 51% of the company's available rig operating days were committed for 2017, including 32% of floating rig days and 69% of jackup rig days. For 2018, an estimated 37% of available rig operating days are committed, consisting of 29% and 46% floating and jackup rig days, respectively. As of Jun 30, overall total backlog was approximately $3.2 billion.

Financials

At the end of the reported quarter, the company had a cash balance of $603 million and long-term debt of $3,793.9 million, with debt-to-capitalization ratio of 38.5%.

How Have Estimates Been Moving Since Then?

Following the release, investors have witnessed an upward trend in fresh estimates. There have been four revisions higher for the current quarter compared to two lower.  In the past month, the consensus estimate has shifted by 10.4% due to these changes.

Noble Corporation Price and Consensus

 

Noble Corporation Price and Consensus | Noble Corporation Quote

VGM Scores

At this time, Noble's stock has a subpar Growth Score of D, however its Momentum is doing a lot better with an B. The stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Our style scores indicate that the stock is equally suitable for momentum and value investors.

Outlook

Estimates have been trending upward for the stock. The magnitude of these revisions also looks promising. The stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.




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