NEW YORK (TheStreet) -- Shares of Nabors Industries (NBR) - Get Report closed up 0.76% to $14.51 on Monday after Fitch Ratings affirmed the drilling and rig services company's outlook of "BBB" rating with a stable outlook.

Ratings were driven by the company's operational and financial flexibility, favorable asset quality characteristics and global footprint, analysts said.

Additionally, the company forecasted neutral-to-modestly positive free cash flow profile and adequate liquidity position with subsequent ability to manage its leverage profile through the downcycle, the firm stated.

While U.S. rig counts have experienced price-induced declines of over 55% since September of 2014, analysts are optimistic that rig activity is showing some signs of stabilization.

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

"We rate NABORS INDUSTRIES LTD (NBR) a HOLD. The primary factors that have impacted our rating are mixed, some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its increase in net income, expanding profit margins and growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, weak operating cash flow and a generally disappointing performance in the stock itself."

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

  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Energy Equipment & Services industry. The net income increased by 144.0% when compared to the same quarter one year prior, rising from $50.67 million to $123.63 million.
  • 35.00% is the gross profit margin for NABORS INDUSTRIES LTD which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 8.73% is above that of the industry average.
  • NABORS INDUSTRIES LTD reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth 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 (-$0.19 versus -$2.35).
  • Net operating cash flow has decreased to $307.17 million or 30.90% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • 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.
  • You can view the full analysis from the report here: NBR Ratings Report