Nabors Industries Ltd (NBR) Stock Analysis and Metrics

Sector: Energy Industry: Oil & Gas Drilling CIK: 0001163739

Market Cap 1.04 Bn

P/B 1.79

P/E 4.66

P/S 0.33

ROIC (Qtr) 16.74

Div Yield % 0.00

Rev 1y % (Qtr) 11.06

Total Debt (Qtr) 2.36 Bn

Debt/Equity (Qtr) 4.07

About

Nabors Industries Ltd., known as Nabors, is a prominent player in the energy sector, specializing in land-based drilling rig fleets and offshore platform rigs. The company, established in 2001, has grown to become one of the largest land-based drilling rig fleets worldwide. Nabors' primary business activities revolve around the provision of advanced drilling equipment, performance tools, directional drilling services, tubular running services, and managed pressure drilling services. These offerings are designed to cater to the needs of major international,...

Nabors Industries Ltd., known as Nabors, is a prominent player in the energy sector, specializing in land-based drilling rig fleets and offshore platform rigs. The company, established in 2001, has grown to become one of the largest land-based drilling rig fleets worldwide.

Nabors' primary business activities revolve around the provision of advanced drilling equipment, performance tools, directional drilling services, tubular running services, and managed pressure drilling services. These offerings are designed to cater to the needs of major international, national, and independent oil and gas companies.

The company's revenue generation is multifaceted. Nabors operates through five reportable segments: U.S. Drilling, Canada Drilling, International Drilling, Drilling Solutions, and Rig Technologies. The U.S. Drilling segment, which accounts for approximately 70% of the company's revenue, operates in major hydrocarbon basins across the Lower 48 market and Alaska, as well as offshore in the Gulf of Mexico. Nabors' drilling contracts are typically daywork contracts, which provide for a basic rate per day when drilling and lower rates when the rig is moving or when drilling operations are interrupted. The company also offers performance-enhancing drilling services, software, and equipment such as managed pressure services, directional drilling, rotary steering systems, and measurement while drilling.

In the highly competitive drilling industry, Nabors stands out due to its advanced drilling technology, experienced workforce, and strong customer relationships. The company is a leader in the development of new technologies, including automation and artificial intelligence, which are designed to improve drilling efficiency and reduce costs. Nabors faces competition from major drilling contractors such as Helmerich & Payne Inc., Patterson-UTI Energy Inc., Precision Drilling Corp., and Ensign Energy Services Inc. in the U.S. Drilling segment, and KCA Deutag Drilling Limited and other regional drilling contractors in the international segment.

Nabors' commitment to diversity and inclusion is reflected in its diverse workforce, which represents different nationalities and ethnicities. The company operates in over 15 countries, employing approximately 12,000 employees worldwide.

Nabors' product and service brands include advanced drilling equipment, performance tools, directional drilling services, tubular running services, and managed pressure drilling services. These offerings are designed to cater to the needs of major international, national, and independent oil and gas companies.

Price action

Investment thesis

Bull case

Healthy cash reserves of 428.05M provide 37.45x coverage of short-term debt 11.43M, demonstrating strong liquidity position and minimal refinancing risk.
Operating cash flow of 596.34M provides strong 30.90x coverage of stock compensation 19.30M, indicating sustainable incentive practices.
Strong operating cash flow of 596.34M provides 2.06x coverage of SG&A expenses 289.74M, showing efficient operational cost management.
Operating cash flow of 596.34M provides solid 0.88x coverage of current liabilities 680.21M, showing strong operational health.
Operating cash flow of 596.34M fully covers other non-current liabilities 237.14M by 2.51x, showing strong long-term stability.

Bear case

Operating cash flow of 596.34M barely covers its investment activities of (246.60M), with a coverage ratio of -2.42, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
Investment activities of (246.60M) provide weak support for R&D spending of 54.17M, which is -4.55x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
Cash reserves of 428.05M provide limited coverage of acquisition spending of 455.75M, which is 0.94x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
High receivables of 487.06M relative to inventory of 108.30M (4.50 ratio) suggests aggressive credit terms or collection difficulties, potentially masking revenue quality issues.
Free cash flow of (109.15M) provides weak coverage of capital expenditures of 705.49M, with a -0.15 ratio suggesting additional external financing needs for growth initiatives.

Peer comparison

Companies in the Oil & Gas Drilling

S.No.	Ticker	Company	Market Cap	P/E	P/S	Total Debt (Qtr)
1	NE	Noble Corp plc	4.57 Bn	20.17	1.33	1.98 Bn
2	RIG	Transocean Ltd.	3.78 Bn	-1.29	0.97	6.22 Bn
3	HP	Helmerich & Payne, Inc.	2.77 Bn	-16.92	0.74	2.06 Bn
4	SDRL	Seadrill Ltd	2.19 Bn	64.29	1.60	0.61 Bn
5	PTEN	Patterson Uti Energy Inc	2.11 Bn	-15.53	0.44	1.29 Bn
6	SOC	Sable Offshore Corp.	1.19 Bn	-3.28	0.00	0.90 Bn
7	NBR	Nabors Industries Ltd	1.04 Bn	4.66	0.33	2.36 Bn
8	BORR	Borr Drilling Ltd	1.00 Bn	13.83	0.98	2.06 Bn

Industry comparisons

Current Valuation	Value	Ind Avg
EV to Assets EV to Assets	0.69	0.71
EV to Cash from Ops. EV/CFO	5.60	19.67
EV to Debt EV to Debt	1.41	2.25
EV to EBIT EV/EBIT	5.45	31.45
EV to EBITDA EV/EBITDA	2.46	3.09
EV to Free Cash Flow [EV/FCF] EV/FCF	-30.57	-4.43
EV to Market Cap EV to Market Cap	3.22	1.90
EV to Revenue EV/Rev	1.06	1.41
Price to Book Value [P/B] P/B	1.79	1.20
Price to Earnings [P/E] P/E	4.66	9.80

Dividend Metrics	Value	Ind Avg
Dividend Coverage Ratio Div Coverage (Qtr)	0.00	0.63
Dividend Payout Ratio % Div Payout % (Qtr)	0.00	-0.17
Dividend per Basic Share Div per Share (Qtr)	0.00	0.34
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr)	0.00	20.18
Interest Coverage Int. cover (Qtr)	2.80	0.18

Growth Metrics	Value	Ind Avg
Capex Growth (1y) % Capex 1y % (Qtr)	-47.01	-8.09
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr)	-5.22	1.42
Dividend Growth (1y) % Div 1y % (Qtr)	0.00	-4.19
EBIAT Growth (1y) % EBIAT 1y % (Qtr)	50.75	-80.36
EBITDA Growth (1y) % EBITDA 1y % (Qtr)	45.38	-158.26
EBIT Growth (1y) % EBIT 1y % (Qtr)	374.31	-32.35
EBT Growth (1y) % EBT 1y % (Qtr)	603.47	4.01
EPS Growth (1y) % EPS 1y % (Qtr)	160.96	-55.08
FCF Growth (1y) % FCF 1y % (Qtr)	-181.13	34.52
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr)	4.07	-0.49

Liquidity Ratios	Value	Ind Avg
Asset Utilization Ratio Asset Util Ratio (Qtr)	0.65	0.43
Cash Payout Ratio Cash Payout (Qtr)	0.00	0.05
Cash Ratio Cash Ratio (Qtr)	0.63	0.45
Current Ratio Curr Ratio (Qtr)	2.09	1.50
Debt to Equity Ratio Debt/Equity (Qtr)	4.07	1.27
Interest Cover Ratio Int Coverage (Qtr)	2.80	0.18
Times Interest Earned Times Interest Earned (Qtr)	2.80	0.18

Profitability	Value	Ind Avg
EBITDA Margin % EBITDA Margin % (Qtr)	40.00	17.06
EBIT Margin % EBIT Margin % (Qtr)	19.45	2.02
EBT Margin % EBT Margin % (Qtr)	12.51	-4.86
Gross Margin % Gross Margin % (Qtr)	40.80	32.16
Net Profit Margin % Net Margin % (Qtr)	7.10	-6.27

Nabors Industries Ltd (NYSE: NBR)

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Price action

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Bull case

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