Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified Nabors Industries ( NBR) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Nabors Industries as such a stock due to the following factors:

  • NBR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $103.7 million.
  • NBR has traded 82,625 shares today.
  • NBR is down 3.1% today.
  • NBR was up 6.3% yesterday.

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More details on NBR:

Nabors Industries Ltd., together with its subsidiaries, provides drilling and rig services, and completion and production services. The company offers equipment manufacturing, rig instrumentation, optimization software, and directional drilling services. The stock currently has a dividend yield of 2%. Currently there are 8 analysts that rate Nabors Industries a buy, 2 analysts rate it a sell, and 6 rate it a hold.

The average volume for Nabors Industries has been 10.3 million shares per day over the past 30 days. Nabors has a market cap of $3.9 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.71 and a short float of 5.5% with 2.10 days to cover. Shares are down 6.2% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Nabors Industries as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, poor profit margins, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

Highlights from the ratings report include:
  • 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 688.7% when compared to the same quarter one year ago, falling from $151.35 million to -$891.07 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.
  • The gross profit margin for NABORS INDUSTRIES LTD is currently lower than what is desirable, coming in at 33.02%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -49.95% is significantly below that of the industry average.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 46.31%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 828.57% 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 (-$0.25 versus -$2.35).

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