NEW YORK (TheStreet) -- Shares of Nabors Industries Ltd. (NBR - Get Report) are higher by 1.22% to $25.64 in pre-market trading on Thursday following an upgrade to "buy" from "hold" at Jefferies Group (JEF).
The firm said it raised its rating on the land drilling contractor due to its confidence in the company's international drilling margin and strategic review.
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Separately, TheStreet Ratings team rates NABORS INDUSTRIES LTD as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate NABORS INDUSTRIES LTD (NBR) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Despite its growing revenue, the company underperformed as compared with the industry average of 10.9%. Since the same quarter one year prior, revenues slightly increased by 3.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Net operating cash flow has significantly increased by 142.26% to $444.56 million when compared to the same quarter last year. In addition, NABORS INDUSTRIES LTD has also vastly surpassed the industry average cash flow growth rate of 49.68%.
- Compared to its closing price of one year ago, NBR's share price has jumped by 54.96%, exceeding the performance of the broader market during that same time frame. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
- NBR's debt-to-equity ratio of 0.63 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that NBR's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.52 is high and demonstrates strong liquidity.
- NABORS INDUSTRIES LTD's earnings per share declined by 48.4% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, NABORS INDUSTRIES LTD reported lower earnings of $0.49 versus $0.80 in the prior year. This year, the market expects an improvement in earnings ($1.15 versus $0.49).
- You can view the full analysis from the report here: NBR Ratings Report