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Nabors (NBR) Down 22.6% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Nabors Industries (NBR - Free Report) . Shares have lost about 22.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Nabors 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.
Nabors Posts Wider Loss, Sales Beat Estimates in Q4
Nabors Industries reported a fourth-quarter 2022 loss from continuing operations of $3.89 per share, wider than the Zacks Consensus Estimate of a loss of $1.06. This underperformance was primarily due to much higher year-over-year total costs and expenses.
However, NBR’s bottom line was significantly better than the year-earlier quarter’s adjusted loss of $14.60 per share, backed by strong revenue performance across its core businesses.
Quarterly revenues of $769.3 million beat the Zacks Consensus Estimate of $734 million. The top line also improved from the year-ago level of $543.7 million.
Nabors’ adjusted EBITDA rose from $131.7 million in the corresponding period of 2021 to $230 million.
Segmental Performances
U.S. Drilling generated quarterly operating revenues of $332.9 million, up 73.1% from the year-ago level of $192.3 million, surpassing the Zacks Consensus Estimate of $325 million due to an increase in the rig count to 102.1 from 80.7 a year ago. The segment recorded an operating income of $68.3 million, comparing favourably to the year-ago loss of $12.6 million.
International Drilling’s operational revenues of $317.6 million increased from the year-ago quarter’s sales of $271.1 million due to the improved performance in Saudi Arabia and Latin America. This boosted growth and the international rig count increased slightly compared to the prior quarter.
Moreover, the unit’s sales beat the Zacks Consensus Estimate of $312 million. The segmental operating income came in at $1.8 million in the reported quarter, improving from the prior-year quarter’s loss of $5.7 million.
Revenues from the Drilling Solutions segment rose 37.7% to $71.3 million in the fourth quarter from about $51.8 million a year ago. Moreover, the same outperformed the Zacks Consensus Estimate of $67 million. Additionally, the segment’s operating income of $24.8 million beat the year-ago figure of $12.9 million.
Revenues from Rig Technologies increased about 33.9% to $62.8 million from the prior-year level of $46.9 million. The metric beat the Zacks Consensus Estimate of $55 million, primarily as a result of higher aftermarket sales in the reported quarter, which reflected increased rig and equipment utilisation.
Moreover, the segment’s operating profit came in at $6.1 million compared with the prior-year profit of $1.5 million
Financial Position
Nabors’s total costs and expenses increased to $801.3 million from $634.6 million in the year-ago quarter, reflecting much higher direct expenses, general and administrative costs, and research and engineering expenses. As of Dec 31, 2022, NBR had $452.3 million in cash and short-term investments and long-term debt of about $2.6 billion.
During the quarter, Nabors generated adjusted free cash flow of $101.3 million.
Guidance
Nabors’ first-quarter 2023 average lower 48 rig count is expected to increase by one rig over the fourth quarter average. Meanwhile, the daily margin is predicted in the $16,100-$16,300 range.
The International Drilling segment’s first-quarter 2023 daily drilling margin is anticipated at approximately $14,900, with the average rig count up approximately one to two rigs compared to the fourth-quarter average.
Nabors expects first-quarter 2023 adjusted EBITDA for Drilling Solutions of 6% above the fourth-quarter level. Finally, the adjusted EBITDA for NBR’s Rig Technologies segment is estimated to be approximately in line with the fourth quarter. The capital expenditure for the first quarter of 2023 is expected at $150 million , with the full-year 2023 figure estimated at $490 million.
Nabors anticipates that free cash flow will be $400 million for the fiscal year 2023.
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 14.18% due to these changes.
VGM Scores
At this time, Nabors has a great Growth Score of A, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top quintile 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 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) Down 22.6% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Nabors Industries (NBR - Free Report) . Shares have lost about 22.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Nabors 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.
Nabors Posts Wider Loss, Sales Beat Estimates in Q4
Nabors Industries reported a fourth-quarter 2022 loss from continuing operations of $3.89 per share, wider than the Zacks Consensus Estimate of a loss of $1.06. This underperformance was primarily due to much higher year-over-year total costs and expenses.
However, NBR’s bottom line was significantly better than the year-earlier quarter’s adjusted loss of $14.60 per share, backed by strong revenue performance across its core businesses.
Quarterly revenues of $769.3 million beat the Zacks Consensus Estimate of $734 million. The top line also improved from the year-ago level of $543.7 million.
Nabors’ adjusted EBITDA rose from $131.7 million in the corresponding period of 2021 to $230 million.
Segmental Performances
U.S. Drilling generated quarterly operating revenues of $332.9 million, up 73.1% from the year-ago level of $192.3 million, surpassing the Zacks Consensus Estimate of $325 million due to an increase in the rig count to 102.1 from 80.7 a year ago. The segment recorded an operating income of $68.3 million, comparing favourably to the year-ago loss of $12.6 million.
International Drilling’s operational revenues of $317.6 million increased from the year-ago quarter’s sales of $271.1 million due to the improved performance in Saudi Arabia and Latin America. This boosted growth and the international rig count increased slightly compared to the prior quarter.
Moreover, the unit’s sales beat the Zacks Consensus Estimate of $312 million. The segmental operating income came in at $1.8 million in the reported quarter, improving from the prior-year quarter’s loss of $5.7 million.
Revenues from the Drilling Solutions segment rose 37.7% to $71.3 million in the fourth quarter from about $51.8 million a year ago. Moreover, the same outperformed the Zacks Consensus Estimate of $67 million. Additionally, the segment’s operating income of $24.8 million beat the year-ago figure of $12.9 million.
Revenues from Rig Technologies increased about 33.9% to $62.8 million from the prior-year level of $46.9 million. The metric beat the Zacks Consensus Estimate of $55 million, primarily as a result of higher aftermarket sales in the reported quarter, which reflected increased rig and equipment utilisation.
Moreover, the segment’s operating profit came in at $6.1 million compared with the prior-year profit of $1.5 million
Financial Position
Nabors’s total costs and expenses increased to $801.3 million from $634.6 million in the year-ago quarter, reflecting much higher direct expenses, general and administrative costs, and research and engineering expenses.
As of Dec 31, 2022, NBR had $452.3 million in cash and short-term investments and long-term debt of about $2.6 billion.
During the quarter, Nabors generated adjusted free cash flow of $101.3 million.
Guidance
Nabors’ first-quarter 2023 average lower 48 rig count is expected to increase by one rig over the fourth quarter average. Meanwhile, the daily margin is predicted in the $16,100-$16,300 range.
The International Drilling segment’s first-quarter 2023 daily drilling margin is anticipated at approximately $14,900, with the average rig count up approximately one to two rigs compared to the fourth-quarter average.
Nabors expects first-quarter 2023 adjusted EBITDA for Drilling Solutions of 6% above the fourth-quarter level. Finally, the adjusted EBITDA for NBR’s Rig Technologies segment is estimated to be approximately in line with the fourth quarter.
The capital expenditure for the first quarter of 2023 is expected at $150 million , with the full-year 2023 figure estimated at $490 million.
Nabors anticipates that free cash flow will be $400 million for the fiscal year 2023.
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 14.18% due to these changes.
VGM Scores
At this time, Nabors has a great Growth Score of A, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top quintile 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 looks promising. Notably, Nabors has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.