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What’s Keeping Weatherford Down despite Margin Improvement?

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What’s Keeping Weatherford Down despite Margin Improvement? PART 1 OF 6

Can Weatherford International Stock Break Out?

Weatherford International versus peers and the industry

On September 12, 2017, Weatherford International (WFT), an OFS (oilfield services and equipment) company with operations around the world, was trading at $4.19. That was a fall of ~16.0% since the beginning of 2017. Baker Hughes, a GE Company (BHGE), WFT’s industry peer, fell ~21.0% in the same period. The Dow Jones Industrial Average (DJIA-INDEX) has risen 12.0% since the beginning of January 2017. The energy sector makes up 6.0% of the DJIA-INDEX.

The Market Vectors Oil Services ETF (OIH), which tracks an index of 25 OFS companies, has fallen 29.0% since the start of the year. The price of WTI (West Texas Intermediate) crude oil has fallen 8.0% so far 2017. In 2016, the price recovered 45.0% after a sharp fall since mid-2014. Read Market Realist’s Hurricane Irma, Russia, and Saudi Arabia Impact Crude Oil to know the latest on the price of crude oil. Weakness in the price of crude oil has also negatively affected TechnipFMC’s (FTI) and National Oilwell Varco’s (NOV) stock prices in 2017.

Can Weatherford International Stock Break Out?

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What Weatherford International stock implies

Weatherford International stock has generally been trending downward since March 2017. Its quarterly revenues failed to improve in the past three quarters, although many of its OFS peers showed improvements in revenue generation during that period. In 2Q17, WFT managed to cut its net losses. Its cash flows were negative in three of the past four quarters, further suggesting possible trouble for the company. So despite a moderate fall in the price of crude oil, WFT has struggled so far in 2017.

Weatherford International’s moving averages

On September 12, 2017, Weatherford International stock was at a 2.8% premium to its 50-day moving average (or DMA). A break above the 50-DMA hints at a turn in prices. However, WFT is also trading 17.5% below its 200-day moving average. A 50-DMA is a short-term moving average, while a 200-DMA shows a long-term trend.

WFT’s short-run 50-DMA has crossed over its long-run 200-DMA since mid-June 2017. That reflects a sharp, sustained downturn for the stock. If the stock turns upward and the 50-DMA crosses above the 200-DMA, it would mean that WFT stock is in the midst of a sustained upward movement.

Series highlight

In this series, we’ll analyze Weatherford International’s revenue and earnings, balance sheet, and industry growth drivers. Let’s start with comments from Weatherford’s management.

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