Nabors Industries’ earnings margin
From 1Q16 to 1Q17, Nabors Industries’ (NBR) EBITDA (earnings before interest, tax, depreciation, and amortization) margin, or its EBITDA as a percentage of its revenue, contracted to 17.8% from 27.1%.
A company’s EBITDA margin is a measure of its operating earnings. Nabors Industries’ makes up 0.01% of the iShares Dow Jones US ETF (IYY). From March 31, 2016, to March 31, 2017, IYY rose 15%, compared to the ~42% rise in NBR’s stock price during the same period.
Upstream operators’ capex cuts
From 1Q16 to 1Q17, 19 of the largest US upstream companies reduced their capexes (capital expenditure) by a total of 21%. NBR’s EBITDA margin, which improved to ~26% in 4Q16, was dented again in 1Q17. Typically, lower upstream capex results in better revenues and operating margins for oilfield equipment and services (or OFS) companies.