Is Weatherford International’s Share Price Still Weak?



Weatherford International versus peers and industry

Weatherford International (WFT) is an oilfield equipment and services (or OFS) company with operations around the world. On August 12, 2016, Weatherford International was trading at $5.51, a fall of 36% year-to-date (or YTD).

The Market Vectors Oil Services ETF (OIH), an ETF tracking an index of 25 OFS companies, has risen by 6% since the beginning of the year. Oil States International (OIS), WFT’s small market cap peer, has risen by 11% during the same period.

The entire OFS industry has been negatively affected by the energy price crash since June 2014. However, crude oil’s price has recovered by 21% YTD.

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What does WFT’s share price movement tell us?

In the past year, Weatherford International’s share price was trending downward until May 2016. WFT’s quarterly revenues and earnings in the past four quarters have been persistently weak, due largely to the energy price depression and weak demand for OFS products and services. Its cash flows, which stayed steady until 4Q15, also turned negative in 1Q16 and 2Q16.

Weatherford International’s moving averages

On August 12, 2016, Weatherford International’s share price was at a 6% discount to its 50-day moving average. It was also trading 24% below its 200-day moving average.

Moving averages exhibit smoother trends following a stock’s price movements. A 50-day moving average is a short-term moving average, while a 200-day moving average shows a long-term trend.

WFT’s short-term moving average has been below its long-term moving average for the past year. WFT’s share price has also stayed below its long-term moving average throughout the past year. This indicates bearishness in WFT’s share price.

In this series, we’ll analyze Weatherford International’s top line and bottom line growth, its various industry growth drivers, its balance sheet, and its valuation multiples. We’ll start by discussing its management’s comments.


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