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Will a Reorganization Drive Weatherford International in 2018?


Nov. 20 2020, Updated 2:30 p.m. ET

Weatherford stock and the industry ETFs

Weatherford International (WFT) stock has fallen 20% in the past year as of December 26, 2017. It has marginally outperformed the VanEck Vectors Oil Services ETF (OIH), which has generated -23% returns since December 27, 2016. OIH tracks an index comprised of 25 OFS (oilfield equipment and services) companies. The Energy Select Sector SPDR ETF (XLE), the broader energy industry ETF, has generated -5% returns during the same period. Weatherford International has also underperformed the SPDR S&P 500 ETF (SPY), which has had 18% returns since December 27, 2016. The Dow Jones Industrial Average (DJIA-INDEX) has risen 24% in the trailing year through December 22, 2017.

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Weatherford versus crude oil

Since December 27, 2016, the price of WTI (West Texas Intermediate) crude oil has risen 11%. During the same period, Schlumberger (SLB) stock has fallen 21% despite the recovery of crude oil. To learn about the worst performing OFS stocks in 2017, read Market Realist’s The 5 Worst Oilfield Companies by Year-to-Date Returns. Higher crude oil prices can significantly affect WFT’s outlook. You can read more on crude oil prices in Market Realist’s Factors Could Change the Trend in Crude Oil Prices.

Operational realignment

Weatherford has made changes in its organization to drive higher accountabilities and efficiencies. Christoph Bausch, the company’s CFO (chief financial officer) said in the 3Q17 earnings conference call, “As part of our transformation, we’ve realigned and flattened our organization to drive increased accountabilities and efficiencies across the entire company. Our new geographical structure is now managed under eastern and western hemisphere leadership with a total of 14 geozones that allow us to move decision-making and resources closer to the point of delivery while giving us the ability to significantly increase cross product line synergies.”

Series highlights

In a previous series, Weatherford’s Stock, Value Drivers, and Debt Concerns, we looked at Weatherford International in detail. In this series, we’ll analyze what the market indicators are saying about Weatherford International stock, its relative valuation multiples, and Wall Street’s take on the company. Let’s start with Weatherford’s historical valuation multiples.


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