Nabors Industries versus peers and industry
Nabors Industries (NBR), one of the largest land-based drilling operators in the world, had a steady run in the Market in 2016. On June 6, 2016, NBR was trading at $10.30. This was ~15% higher than its price at the beginning of the year.
The VanEck Vectors Oil Services ETF (OIH), which tracks an index of 25 OFS (oilfield services and equipment) companies, has risen 12% since January 1, 2016. Precision Drilling (PDS), NBR’s lower market cap peer, has risen 35% during the same period. The price of WTI (West Texas Intermediate) crude oil recovered 39% during this period. NBR is 3.4% of OIH.
What does Nabors Industries’ share price movement tell us?
Since June 2015, Nabors Industries’ share price has trended downward. Its quarterly revenues and net income in the past four quarters has been persistently weak. Its cash flow improved in fiscal 4Q15 over the previous quarter and then fell again in fiscal 1Q16.
Since the third week of January, when NBR’s share price reached its one-year low, it has recovered 86%. NBR is 0.20% of the iShares Core S&P Mid-Cap (IJH). For investors looking for exposure to the energy sector, energy makes up 3.7% of IJH.
Nabors Industries’ moving averages
On June 6, 2016, Nabors Industries’ share price was at a 13% premium to its 50-day moving average (or DMA). It was trading 14% above its 200-DMA.
Moving averages exhibit a smoother trend following a stock’s price movement. A 50-DMA is a short-term MA (moving average). A 200-DMA shows a long-term trend. NBR’s short-run MA, which stayed below its long-run MA from August 2015, has been staying close to the long-run MA since the third week of May. NBR’s share price has gone above its short-run MA since the beginning of June. This indicates that NBR’s 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. Let’s start with some comments from the company’s management.