Weatherford International versus peers and industry
On December 15, 2017, Weatherford International (WFT), an OFS (oilfield services and equipment) company with operations around the world, was trading at $3.36. That’s a ~33% fall since the beginning of 2017. Baker Hughes, a GE Company (BHGE), WFT’s industry peer, has also fallen ~33% during the same period. The Dow Jones Industrial Average (DJIA-INDEX) has risen 25% since the beginning of January 2017. The energy sector makes up 5.8% of DJIA-INDEX.
The VanEck Vectors Oil Services ETF (OIH), which tracks an index of 25 OFS companies, has fallen 27% since the start of the year. WTI (West Texas Intermediate) crude oil has risen 6.7% in 2017. Read Market Realist’s Which Factors Could Limit the Upside for Crude Oil Futures? to know the latest on the price of crude oil. Weakness in crude oil has also negatively affected TechnipFMC’s (FTI) stock and National Oilwell Varco’s (NOV) stock in 2017.
What does Weatherford International stock imply?
Weatherford International stock has generally been trending downward since late March 2017. Although WFT’s quarterly revenues showed signs of improvement in 3Q17, it continued to have losses in the past six quarters. Its cash flows were negative in the past three quarters, further suggesting trouble for the company. So despite a stronger crude oil price, WFT has struggled in 2017.
Weatherford’s moving averages
On December 15, 2017, Weatherford International stock was at a 7% discount to its 50-day moving average (or DMA). Moving below the 50-DMA hints at a weakness in prices. WFT was also trading 25.7% below its 200-day moving average. A 50-DMA is a short-term moving average, while a 200-DMA shows a long-term trend.
WFT’s short-run 50-DMA has crossed over its long-run 200-DMA since mid-June 2017. That reflects the sharp, sustained downturn of the stock. If the stock turns upward and the 50-DMA crosses above the 200-DMA, it could mean that WFT stock is in the midst of a sustained upward move.
In this series, we’ll be looking at Weatherford International’s revenue and earnings, its balance sheet, and some industry growth drivers. Let’s start by seeing what Weatherford’s management has to say.