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Weatherford International: Valuation, Analyst Targets, and More

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Weatherford International: Valuation, Analyst Targets, and More PART 1 OF 7

Will Technology Innovations Drive Weatherford in 2017?

Weatherford’s stock price versus industry ETFs

Weatherford International’s (WFT) stock was down 33% in the past year until September 12, 2017. Weatherford has underperformed the VanEck Vectors Oil Services ETF (OIH), which has generated -11% returns since September 13, 2016. OIH, an ETF, tracks an index comprised of 25 oilfield equipment and services (or OFS) companies. The Energy Select Sector SPDR ETF (XLE), the broader energy industry ETF, has generated -4% returns during the same period. Weatherford International has also underperformed the SPDR S&P 500 ETF (SPY), which has produced 17% returns since September 13, 2016. The Dow Jones Industrial Average (DJIA-INDEX) rose 22% in the trailing year to September 12, 2017.

Weatherford versus crude oil 

Since September 13, 2016, the West Texas Intermediate (or WTI) crude oil price has risen 7%. During the same period, Schlumberger’s (SLB) stock price has fallen 14% despite the crude oil price recovery. For a comparative analysis of oilfield services companies’ free cash flows, read Market Realist’s Oilfield Services Stocks: Free Cash Flow Winners and Losers. Higher crude oil price could significantly affect WFT’s outlook. Read more about crude oil prices in OPEC Report: Could US Crude Oil Break above the $50 Mark?Will Technology Innovations Drive Weatherford in 2017?

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WFT’s major recent technology innovations

  • In 2Q17, Weatherford released the ForeSite production optimization platform for upstream companies. It’s an integrated software solution that leverages the Internet of Things and advanced analytics to reduce the downtime of production assets and optimize critical maintenance routines.
  • Weatherford has recently developed the premium version of RipTide for the offshore market. It’s an RFID (radio frequency identification) controlled drilling reamer that incorporates advanced cutter technology.
  • WFT’s Raptor 2.0 cased-hole evaluation system reveals bypassed oil and gas reserves with accurate through-casing reservoir characterization.
  • WFT’s management claims its Terraform packers system saved upstream customers $20 million per well.
  • According to WFT’s management, its Red Eye system saved customers $10 million per well.
  • Its OneSync software and Microflux control system let operators drill 2,000 feet deeper than the earlier planned depth. WFT’s One Sync synchronizes all drilling processes to achieve better performance.

Series highlight

We already discussed Weatherford in detail in Market Realist’s What’s Keeping Weatherford Down despite Margin Improvement? In this series, we’ll analyze what the market indicators are saying about Weatherford International’s stock, WFT’s relative valuation multiples, and Wall Street’s call on Weatherford. We’ll start with Weatherford’s historical valuation multiples.

Correction: We have changed the above description of the Raptor 2.0 system and regret any inaccuracy in our original post.

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