Nabors Industries LTD. (NBR)

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Nabors Industries Ltd Stock Downgraded (NBR)

By TheStreet Wire 05/16/12 - 05:01 AM EDT

http://www.thestreet.com/story/11537597/1/nabors-industries-ltd-stock-downgraded-nbr.html?puc=yahoo&cm_ven=YAHOO


NEW YORK (TheStreet) -- Nabors Industries (NYSE:NBR) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:

¦ The revenue growth came in higher than the industry average of 14.2%. Since the same quarter one year prior, revenues rose by 37.6%. Growth in the company's revenue appears to have helped boost the earnings per share.

¦ NABORS INDUSTRIES LTD has improved earnings per share by 48.5% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, NABORS INDUSTRIES LTD increased its bottom line by earning $1.17 versus $0.37 in the prior year. This year, the market expects an improvement in earnings ($2.20 versus $1.17).

¦ 37.30% is the gross profit margin for NABORS INDUSTRIES LTD which we consider to be strong. Regardless of NBR's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 7.10% trails the industry average.

¦ NBR's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 45.29%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.

¦ Net operating cash flow has decreased to $244.93 million or 16.02% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, NABORS INDUSTRIES LTD has marginally lower results.

Nabors Industries Ltd., together with its subsidiaries, operates as a land drilling contractor worldwide. The company has a P/E ratio of 11.3, below the average energy industry P/E ratio of 15.1 and below the S&P 500 P/E ratio of 17.7. Nabors has a market cap of $4.38 billion and is part of the basic materials sector and energy industry. Shares are down 15.6% year to date as of the close of trading on Tuesday.