Key Energy Services’ YTD returns versus the industry
Key Energy Services’ (KEG) year-to-date returns were 67% as of November 20. In comparison, since December 30, 2016, the Energy Select Sector SPDR ETF (XLE) has fallen 11%. The VanEck Vectors Oil Services ETF (OIH) saw -28% year-to-date returns. The Dow Jones Industrial Average (DJIA-INDEX) rose 19% year-to-date as of November 20. The SPDR S&P 500 ETF (SPY) has produced 16% returns during the same period. So KEG hugely underperformed the OFS (oilfield services and equipment) industry ETF as well as the broader energy industry ETFs and the broad equity market indexes.
Key Energy Services has been much steadier in the past month. Since October 20, KEG has fallen only ~1%. In the past month, the industry ETF, represented by OIH, rose 1% while the broad market ETF, represented by SPY, remained unchanged.
How KEG’s revenues and earnings performed in 9M17?
From 4Q16 through 3Q17, KEG’s revenues rose 2%. Its earnings switched to a $38 million loss in 3Q17—a remarkable fall over the $163 million net profit it reported in 4Q16. KEG’s free cash flows improved in 3Q17 compared to 4Q16 but remained negative during this period. Its net debt (total debt minus capital expenditures) rose 7% while its indebtedness (net debt to EBITDA) wasn’t meaningful as a result of negative EBITDA. EBITDA is earnings before interest, tax, depreciation, and amortization.
Next, we’ll compare year-to-date returns from Nabors Industries (NBR) with market indicators and analyze its fundamental metrics.