Weatherford International’s share price reaction
Weatherford International released its financial results for fiscal 1Q16 on May 4, 2016. On that day, its stock price reacted negatively. It fell ~9.3% to $7.25 from the previous day’s close. Since the beginning of this year, its share price is down ~16%.
Schlumberger (SLB) released its financial information for fiscal 1Q16 on April 21. Its share price fell ~2% on the day of the earnings release.
Weatherford’s share price returns compared to the industry
In the past year, Weatherford International’s stock has returned -48% (net of dividends) until May 4. In the past year, it underperformed the VanEck Vectors Oil Services ETF (OIH). OIH has returned approximately -26%. The Energy Select Sector SPDR ETF (XLE) is the broader energy industry ETF. It had a -18% return. Weatherford International underperformed the SPDR S&P 500 ETF (SPY). SPY produced ~1% returns during the same period. Weatherford International did outperform the US rig count. The rig count returned -54% in the past year.
Will cost reduction efforts be beneficial?
Weatherford International plans to reduce the headcount by 2,000 and close five additional manufacturing and services facilities in the near term. In fiscal 2016, it plans to close another 30 operating and other facilities. The company’s CEO commented in the fiscal 1Q16 press release that “We believe these deliberate actions will best allow Weatherford to balance the demands of the short-term market against the gains of an eventual recovery.” Read Will Weatherford’s Leverage Improve after Its Share Issue? to learn about Weatherford International’s latest financial structure.
Next, we’ll discuss Wall Street analysts’ targets for Weatherford International.