NEW YORK (TheStreet) -- Shares of oil and gas drilling and exploration company Nabors Industries (NBR) were falling 4.5% to $12.91 Monday as oil prices fell due to oversupply and refinery strike concerns.
WTI crude oil for April delivery was falling 2.3% to $49.64 a barrel Monday afternoon, and Brent crude oil or April delivery was falling 1.2% to $59.48 a barrel.
Oil prices were falling as investors worried about excess crude supply, according to Bloomberg. The news site said some oversupply concerns are due to a pipeline in Libya that recently resumed pumping oil after it was halted by a fire.
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An ongoing refinery strike also helped bring oil prices lower, according to Bloomberg. The U.S. United Steelworkers union, which represents workers are more than 200 refineries, fuel terminals, pipelines, and chemical plants in the U.S., recently rejected seven contract offers from Royal Dutch Shell (RDS.A) , which is bargaining on behalf of other oil companies, including Exxon Mobil (XOM) and Chevron (CVX) .
The strike started on Feb. 1 at nine sites, and has since expanded to 12 refineries, and three other facilities that account for almost 20% of the U.S.'s refining capacity. The union said it plans to restart talks this week.
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 revenue growth, compelling growth in net income and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- NBR's revenue growth has slightly outpaced the industry average of 12.4%. Since the same quarter one year prior, revenues rose by 16.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
- 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 reported lower earnings of $0.51 versus $0.80 in the prior year. This year, the market expects an improvement in earnings ($1.18 versus $0.51).
- The gross profit margin for NABORS INDUSTRIES LTD is currently lower than what is desirable, coming in at 34.83%. It has decreased from the same quarter the previous year. Regardless of the weak results of the gross profit margin, the net profit margin of 5.84% is above that of the industry average.
- NBR's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 34.28%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, NBR is still more expensive than most of the other companies in its industry.
- You can view the full analysis from the report here: NBR Ratings Report