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Noble Corp. (NE) Down 15.5% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Noble Corp. (NE - Free Report) . Shares have lost about 15.5% in that time frame, underperforming the S&P 500.

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

Noble Q1 Loss Narrower Than Expected, Revenues Beat

Noble reported first-quarter 2019 loss from continuing operations of 37 cents per share, narrower than the Zacks Consensus Estimate of a loss of 42 cents. Also, the figure was narrower than the year-ago loss of 55 cents.

Total revenues in the quarter increased to $282.9 million from $235.2 million in the prior-year period. Also, quarterly revenues beat the Zacks Consensus Estimate of $275 million. Contract Drilling Services, which contributed $270.5 million to its total revenues, increased 18.1% year over year.

The better-than-expected results were supported by year-over-year increase in total rig fleet utilization and overall operating days.

Operating Highlights

Net loss from continuing operations was $92 million, narrower than first-quarter 2018 loss of $135 million.

Total rig utilization increased to 76% from the year-ago level of 47%. However, overall average dayrate declined to $172,305 from $195,633 in the year-ago quarter. Nonetheless, overall operating days rose to 1,570 from 1,171 in the year-ago period. 

The average dayrate for the company's jackups was $127,150 compared with $153,662 in the prior-year quarter. Average capacity utilization rose to 93% from the year-ago level of 56%.

The average dayrate for the company's floaters was $236,715 compared with $259,326 in the prior-year quarter. Average capacity utilization jumped to 60% from the year-ago level of 37%.

Nearly 64% of the available rig days were committed for 2019, including 53% of floating rig days and 75% of jackup rig days.

Costs & Expenses

Total operating costs increased to $306.7 million in the quarter from the year-ago period’s $292 million. Cost of contract drilling services increased to $171.7 million in the first quarter from the year-ago level of $136.8 million. General and administrative costs declined to $16 million from $22.1 million in first-quarter 2018.

Backlog

As of Mar 31, 2019, total backlog was approximately $2.3 billion, of which around $1.4 billion and $900 million were contributed by floating rig and jackup rig fleets, respectively.

Financials

Capital expenditure in the reported quarter totaled $83 million.

At the end of the first quarter, the company had a cash balance of $187.1 million and long-term debt of $3,550.8 million, with a debt-to-capitalization ratio of 45.9%.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

At this time, Noble Corp. has a subpar Growth Score of D, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.

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


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