Noble Corp plc (NYSE: NE)

Sector: Energy Industry: Oil & Gas Drilling CIK: 0001895262
Market Cap 6.93 Bn
P/B 1.52
P/E 31.96
P/S 2.11
ROIC (Qtr) 40.06
Div Yield % 4.60
Rev 1y % (Qtr) -17.57
Total Debt (Qtr) 1.98 Bn
Debt/Equity (Qtr) 0.43
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About

Noble Corp plc, known by its stock symbol NE, operates in the oil and gas industry as a leading offshore drilling contractor. The company's business strategy revolves around efficient, reliable, and safe offshore drilling to provide the best services for its clients. Noble's global operations span various regions worldwide, with a fleet of 32 drilling rigs that includes 19 floaters and 13 jackups. This fleet is recognized as one of the youngest and highest specification fleets of global scale in the industry, designed to provide drilling solutions...

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Investment thesis

Bull case

  • Strong operating cash flow of 951.68M provides robust 0.48x coverage of total debt 1.98B, indicating excellent debt servicing capability and financial flexibility.
  • Operating cash flow of 951.68M provides strong 31.19x coverage of stock compensation 30.51M, indicating sustainable incentive practices.
  • Strong operating cash flow of 951.68M provides 7.15x coverage of SG&A expenses 133.15M, showing efficient operational cost management.
  • Strong tangible asset base of 7.53B provides 3.81x coverage of total debt 1.98B, indicating robust asset backing and low credit risk.
  • Cash reserves of 471.40M provide ample 3.20x coverage of acquisition spending 147.20M, enabling strategic growth opportunities.

Bear case

  • Operating cash flow of 951.68M barely covers its investment activities of (350.07M), with a coverage ratio of -2.72, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 951.68M provides thin coverage of dividend payments of (320.37M) with a -2.97 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Operating earnings of 435.50M show weak coverage of depreciation charges of 585.47M, with a 0.74 ratio indicating high capital intensity and potential reinvestment needs.
  • Free cash flow of 432.15M represents just -18.05x of debt issuance (23.94M), suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • High depreciation of 585.47M relative to operating cash flow of 951.68M, which is 0.62x suggests significant maintenance capital requirements affecting free cash flow.

Product and Service Breakdown of Revenue (2024)

Segments Breakdown of Revenue (2024)

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 6.93 Bn 31.96 2.11 1.98 Bn
2 RIG Transocean Ltd. 5.75 Bn -1.96 1.49 6.22 Bn
3 HP Helmerich & Payne, Inc. 3.52 Bn 28.23 2.10 2.03 Bn
4 PTEN Patterson Uti Energy Inc 3.09 Bn -33.00 0.64 1.28 Bn
5 SDRL Seadrill Ltd 2.83 Bn 83.33 2.08 0.61 Bn
6 BORR Borr Drilling Ltd 1.35 Bn 18.72 1.32 2.06 Bn
7 PDS PRECISION DRILLING Corp 1.15 Bn 852.53 0.85 0.54 Bn
8 NBR Nabors Industries Ltd 1.10 Bn 3.84 0.34 2.50 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.12 0.79
EV to Cash from Ops. EV/CFO 8.85 24.21
EV to Debt EV to Debt 4.26 2.57
EV to EBIT EV/EBIT 19.35 12.76
EV to EBITDA EV/EBITDA 8.42 3.75
EV to Free Cash Flow [EV/FCF] EV/FCF 19.50 -17.89
EV to Market Cap EV to Market Cap 1.22 1.63
EV to Revenue EV/Rev 2.56 1.78
Price to Book Value [P/B] P/B 1.52 1.38
Price to Earnings [P/E] P/E 31.96 108.99
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.68 0.50
Dividend Payout Ratio % Div Payout % (Qtr) 147.10 -1.94
Dividend per Basic Share Div per Share (Qtr) 2.00 0.37
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 73.53 17.60
Interest Coverage Int. cover (Qtr) 2.68 -0.09
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 9.70 -9.70
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 90.62 23.22
Dividend Growth (1y) % Div 1y % (Qtr) 11.11 -2.52
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -35.30 -71.06
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -3.06 -147.64
EBIT Growth (1y) % EBIT 1y % (Qtr) -25.75 -10.82
EBT Growth (1y) % EBT 1y % (Qtr) -44.53 -17.93
EPS Growth (1y) % EPS 1y % (Qtr) -54.82 -59.95
FCF Growth (1y) % FCF 1y % (Qtr) 439.12 69.49
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -2.49 0.08
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.44 0.44
Cash Payout Ratio Cash Payout (Qtr) 0.22 0.05
Cash Ratio Cash Ratio (Qtr) 0.62 0.54
Current Ratio Curr Ratio (Qtr) 1.68 1.47
Debt to Equity Ratio Debt/Equity (Qtr) 0.43 1.30
Interest Cover Ratio Int Coverage (Qtr) 2.68 -0.09
Times Interest Earned Times Interest Earned (Qtr) 2.68 -0.09
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 31.10 16.23
EBIT Margin % EBIT Margin % (Qtr) 13.26 0.93
EBT Margin % EBT Margin % (Qtr) 8.31 -5.75
Gross Margin % Gross Margin % (Qtr) 37.50 31.73
Net Profit Margin % Net Margin % (Qtr) 6.60 -6.68