Comparable company analysis
Nabors Industries’ EV (approximately the sum of its equity value and net debt), when scaled by trailing-12-month adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) is lower than peers’ average. NBR makes up 0.11% of the iShares US Energy (IYE). IYE fell 6% in the past year, versus a 58% fall in NBR’s stock price.
NBR’s forward EV-to-EBITDA multiple compression versus its adjusted TTM EV/EBITDA is lower than peers’ average. The expected rise in NBR’s adjusted operating earnings (or EBITDA) in the next 12 months is less extreme compared to peers’. This difference should typically reflect lower current EV/EBITDA multiple versus the peer average.
Nabors Industries’ debt-to-equity multiple is higher than the group average. A higher debt-to-equity multiple typically indicates a higher debt load and more financial risks. TESO has no debt while Baker Hughes’s leverage is lower than NBR’s. Read more about large OFS companies in Oilfield Services after 3Q17: SLB, HAL, BHGE, and NOV.
Price-to-earnings ratio (or PE)
NBR’s forward PE multiple isn’t meaningful, reflecting analysts’ expectation of negative adjusted earnings in the next four quarters. Except for BHGE, sell-side analysts expect negative earnings for all of NBR’s peers in the next four quarters.
Next, we’ll discuss investors’ short interest in NBR.