Nabors Industries (NBR) Stock Falls on Declining Oil Prices

Nabors Industries (NBR) stock is down in midday trading on Tuesday as oil prices plummet.
By Amanda Albright ,

NEW YORK (TheStreet) -- NaborsIndustries  (NBR) - Get Report stock is declining by 1.87% to $9.47 in midday trading on Tuesday, as oil prices plunge and affect stocks in the energy sector. 

Oil prices are falling due to a stronger dollar and concerns about the oversupply of oil, the Wall Street Journal reports. 

Crude oil (WTI) is slipping by 1.80% to $40.99 per barrel, while Brent crude is down by 1.35% to $43.96 per barrel in early afternoon trading, according to the CNBC.com index.

"Weighing on oil prices is the strengthening in dollar as investors are increasingly optimistic that the Fed will raise interest rates at the December meeting," Michael Poulsen, oil analyst at Global Risk Management, told the Journal

Based in Bermuda, Nabors Industries is a drilling and rig services company.

Separately, TheStreet Ratings team rates NABORS INDUSTRIES LTD as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:

We rate NABORS INDUSTRIES LTD (NBR) a SELL. This is driven by a few notable weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Energy Equipment & Services industry. The net income has significantly decreased by 379.0% when compared to the same quarter one year ago, falling from $106.05 million to -$295.83 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Energy Equipment & Services industry and the overall market, NABORS INDUSTRIES LTD's return on equity significantly trails that of both the industry average and the S&P 500.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 46.52%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 352.94% compared to the year-earlier 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.
  • NABORS INDUSTRIES LTD has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, NABORS INDUSTRIES LTD swung to a loss, reporting -$2.35 versus $0.51 in the prior year. This year, the market expects an improvement in earnings (-$0.31 versus -$2.35).
  • Along with the very weak revenue results, NBR underperformed when compared to the industry average of 30.8%. Since the same quarter one year prior, revenues plummeted by 53.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • You can view the full analysis from the report here: NBR

Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.

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