Why Is Nabors Industries’ Share Price Still Weak?



Nabors Industries versus peers and industry

Nabors Industries (NBR) is one of the largest land-based drilling operators in the world. It had a weak run in the stock market. On April 4, Nabors Industries was trading at $8.75. This was ~41% lower than its price a year ago.

The VanEck Vectors Oil Services ETF (OIH) is an ETF tracking index of 25 oilfield service companies. It fell 28% in the past year. Oceaneering International (OII) is Nabors Industries’ larger market cap peer. It fell 44% during the same period. Oil States International (OIS) and C&J Energy Services (CJES) fell 29% and 90%, respectively, in the past year. West Texas Intermediate crude oil prices fell 32% during this period. Nabors Industries accounts for 3.2% of OIH.

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What does Nabors Industries’ share price movement tell us?

Nabors Industries’ share price trended down since late-April 2015. Its quarterly revenue and net income in the past four quarters persistently stayed weak. Its cash flow improved in fiscal 4Q15 compared to the previous quarter. Since the third week of January, when Nabors Industries’ share price reached its one-year low, it recovered 58%. Nabors Industries accounts for 0.16% of the iShares Core S&P Mid-Cap ETF (IJH). For investors looking for exposure to the energy sector, energy accounts for 3.2% of IJH.

Nabors Industries’ moving averages

On April 4, Nabors Industries’ share price was at a 15% premium to its 50-day moving average. It’s trading 10% below its 200-day moving average.

Moving averages show a smoother trend following the stock’s price movement. A 50-day moving average is a short-term moving average. A 200-day moving average shows a long-term trend. Nabors Industries’ short-term moving average stayed below its long-term moving average since August 2015. Its share price has gone above its short-term moving average since the beginning of March. This shows that its share price is gathering some momentum.

In this series, we’ll analyze Nabors Industries’ top-line and bottom-line growth, free cash flow, dividend, and valuation multiples. We’ll start with management’s comments.


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