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Weatherford (WFT) Down 48.9% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Weatherford International (WFT - Free Report) . Shares have lost about 48.9% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Weatherford 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 catalysts.

Weatherford Q3 Loss Narrower Than Expected

Weatherford International Ltd. reported third-quarter 2018 adjusted loss of 10 cents per share, narrower than the Zacks Consensus Estimate of a loss of 13 cents and a loss of 22 cents in the prior-year quarter.
 
Total revenues amounted to $1,444.0 million, down from $1,460.0 million in the year-ago quarter. The figure lagged the Zacks Consensus Estimate of $1,517.0 million.

Results were affected by lower activity in the United States and the Middle East along with unfavorable foreign exchange impacts. This was partially offset by spring breakup in Canada and higher activity in the Continental Europe and Asia.

Operational Performance

The leading oilfield services company realigned its organization into two operating segments — Western Hemisphere and Eastern Hemisphere — during the fourth quarter of 2017. The Western Hemisphere includes the previous North America and Latin America businesses as well as land drilling rig operations in Colombia and Mexico.

The Eastern Hemisphere segment comprises the previous Middle East/North Africa/Asia Pacific segment and Europe/SSA/Russia segment as well as land drilling rig operations in the Eastern Hemisphere. Research and development expenses will be incorporated in the Western and Eastern Hemisphere segment results.

In the third quarter, revenues from Western Hemisphere totaled $762 million, down 0.9% sequentially and 0.7% year over year. Revenues lagged the Zacks Consensus Estimate of $812 million. Lower activity in the U.S. rig counts and unfavorable foreign exchange impacts led to the decline. This was partially offset by spring breakup in Canada.

Revenues in Eastern Hemisphere totaled $682 million, up 0.4% sequentially but down 1.6% year over year. Revenues fell short of the Zacks Consensus Estimate of $710 million. The sequential rise was propelled by higher activity in the Continental Europe and Asia, which was partially offset by lower activity in the Middle East. The year-over-year fall can be attributed to negative impact on foreign exchange rates in Russia.

Liquidity

As of Sep 30, Weatherford had $393 million in cash and cash equivalents. Long-term debt amounted to $7,626 million. The company spent approximately $55 million in capital expenditures during the reported quarter.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -20.07% due to these changes.

VGM Scores

Currently, Weatherford has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. 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. Notably, Weatherford has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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