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Why Nabors Industries’ 3Q17 Earnings Missed Estimates

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Nov. 20 2020, Updated 10:23 p.m. ET

Nabors Industries’ 3Q17 revenue

Nabors Industries (NBR) released its 3Q17 financial results on October 24, 2017. The company recorded operating revenues of ~$662.0 million in 3Q17, which was a 27.0% rise from ~$518.0 million in 3Q16. An increase in the number of onshore rigs in NBR’s US operations primarily resulted in the rise in revenue for 3Q17.

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Revenue growth comparison

Compared to 2Q17, Nabors Industries’ operating revenues rose 5.0%. In comparison, 3Q17 revenue for Halliburton (HAL), NBR’s larger market-cap peer, rose 10.0% over 2Q17, while Schlumberger’s (SLB) revenues rose 6.0% in the same period. You can read more on HAL in Market Realist’s Halliburton’s 3Q17 Earnings: What Worked for the Company.

Nabors Industries’ 3Q17 earnings

The company’s 3Q17 adjusted net EPS (earnings per share) was -$0.42. That fell short of the consensus sell-side analyst EPS estimate of -$0.34. Despite a higher US rig count, lower operating margins for NBR’s international operations and lower profits for the Rig Services segment in 3Q17 over 2Q17 pushed NBR’s adjusted earnings below analysts’ estimates.

Compared to 3Q16, NBR’s adjusted loss deteriorated more in 3Q17. On average, adjusted EPS has exceeded the consensus EPS in the past 13 quarters. Nabors Industries makes up 2.2% of the VanEck Vectors Oil Services ETF (OIH), which tracks an index of 25 OFS (oilfield services and equipment) companies. Since June 30, 2017, OIH has fallen 6.0% compared to a 21.0% fall in NBR stock in that same period.

What affected NBR’s reported earnings in 3Q17?

In 3Q17, NBR’s reported net loss was ~$148.5 million. That compares to a ~$111.0 million net loss in 3Q16. A lower rig margin contributed to higher losses for NBR in 3Q17.

Compared to 2Q17, Nabors Industries’ net loss inflated. In 2Q17, its net loss was ~$133.0 million. In 3Q17, Baker Hughes, a GE Company (BHGE) reported $104.0 million in net losses. You can find out about BHGE’s 3Q17 earnings in Market Realist’s Baker Hughes, a GE Company: 3Q17 Earnings Overview.

Next, we’ll look at NBR’s growth drivers and operating income.

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