Nabors Industries Ltd. (NYSE:NBR) just released its quarterly report and things are looking bullish. Results overall were credible, with revenues arriving 2.3% better than analyst forecasts at US$536m. Higher revenues also resulted in lower statutory losses, which were US$22.13 per share, some 2.3% smaller than the analysts expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there’s been a strong change in the company’s prospects, or if it’s business as usual. Readers will be glad to know we’ve aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Nabors Industries after the latest results.
Taking into account the latest results, the current consensus, from the 15 analysts covering Nabors Industries, is for revenues of US$2.18b in 2020, which would reflect a sizeable 26% reduction in Nabors Industries’ sales over the past 12 months. Losses are expected to hold steady at around US$134.83. Before this latest report, the consensus had been expecting revenues of US$2.18b and US$133.58 per share in losses.
The average price target fell 6.2% to US$28.13, with the ongoing losses seemingly a concern for the analysts, despite the lack of real change to the earnings forecasts.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. Over the past five years, revenues have declined around 7.6% annually. Worse, forecasts are essentially predicting the decline to accelerate, with the estimate for a 26% decline in revenue next year. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 3.5% per year. So it’s pretty clear that, while it does have declining revenues, the analysts also expect Nabors Industries to suffer worse than the wider industry.
The Bottom Line
The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations – although our data does suggest that Nabors Industries’ revenues are expected to perform worse than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates – from multiple Nabors Industries analysts – going out to 2024, and you can see them free on our platform here.
And what about risks? Every company has them, and we’ve spotted 2 warning signs for Nabors Industries you should know about.
If you’re looking to trade Nabors Industries, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide from a single integrated account.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email firstname.lastname@example.org.