uploads///Stock Prices

Nabors Industries: Management Expectations for 2018

By

Mar. 1 2018, Published 12:49 p.m. ET

Nabors Industries’ stock price reaction

Nabors Industries (NBR) released its financial results for 4Q17 and fiscal 2017 on February 27. On that day, NBR’s stock price reacted negatively, falling 3.8% to $6.66 from the previous day’s close and underperforming the 1.4% fall in the crude oil prices over the previous day’s close. The VanEck Vectors Oil Services ETF (OIH) decreased 1.6%.

Article continues below advertisement

NBRs stock price movement versus the industry

Since February 28, 2017, Nabors Industries’ stock has fallen 55% as of February 28, 2018. Since February 28, 2017, NBR has underperformed the VanEck Vectors Oil Services ETF, which has generated -24% returns. The Energy Select Sector SPDR ETF (XLE), the broader energy industry ETF, has gone down ~4% in the past year. Nabors Industries has grossly underperformed the SPDR S&P 500 ETF (SPY), which increased 16% during the period.

What does Nabors Industries’ management expect?

Nabors Industries’ management expects margins to improve in the US onshore business in 1Q18 while margins may take a hit in NBR’s international operations. In the 4Q17 earnings press release, William Restrepo, NBR’s CFO, commented, “We expect our U.S. Lower 48 daily margins to improve by approximately $1,000 in the first quarter, as we add several more rigs to our working fleet. Our International segment will benefit from incremental rigs; however, margins will diminish in the near term as a result of mix and rate adjustments on numerous multi-year contract extensions.”

He continued, “During the second half of 2018, we expect daily margins in this segment should revert to their long-term levels as our rig count increases and we benefit from additional high margin work.”

Next in this series, we’ll discuss Wall Street analysts’ targets for Nabors Industries.

Advertisement

More From Market Realist