Global land drilling contractor
Nabors Industries Ltd.
) is expected to report its second quarter 2012 earnings on
Tuesday, July 24, after the market closes.
The Zacks Consensus Estimate for the second quarter is a profit of
39 cents per share, on revenue of $1,730 million.
Preceding Quarter Recap
Nabors reported bright first quarter 2012 results, backed by strong
contributions from most of the business units and lower interest
Earnings per share from continuous operations (excluding special
items) came in at 65 cents, surpassing the Zacks Consensus Estimate
of 51 cents. Comparing year over year, results shot up 124.1% from
29 cents (adjusted) earned in the year-ago quarter.
Revenues of $1,842.0 million were above first quarter 2011 sales of
$1,402.1 million, aided by strong activities across all business
units. The result was also 2.1% above the Zacks Consensus Estimate.
As of March 31, 2012, the company had $493.9 million in cash and
short-term investments and $4,773.3 million in long-term debt
(inclusive of current portion), with a debt-to-capitalization ratio
of approximately 45.0%.
Agreement of Analysts
The analysts exhibit a pessimistic sentiment on Nabors'
to-be-reported quarter based on the company's expectation of a poor
performing Pressure Pumping segment and low contributions from the
International markets. These factors are expected to drag down the
operating income and earnings level of the second quarter.
Out of the 19 analysts covering the stock, 16 have lowered their
estimates in the last 30 days, while 11 have decreased the same in
the last one week. However, none of the analysts have revised any
estimate upward over the past one month.
Magnitude of Estimate Revisions
With effect from the earnings revisions by the analysts in the last
30 days, the Zacks Consensus Estimate for the quarter dropped to 39
cents from 46 cents. Seven days ago, the estimate for the second
quarter was 43 cents.
Nabors exhibited a mixed earnings surprise trend over the last four
quarters. The company recorded a minimum surprise of negative 8.00%
in second quarter 2011 while a maximum of 10.00% in third quarter
2011. On average, the earnings surprise was 0.52%.
Barbados-based Nabors, which conducts oil, gas and geothermal land
drilling operations and is a leading land-drilling contractor
worldwide, currently retains a Zacks #4 Rank, which translates into
a short-term Sell rating.
Nabors has businesses all over the globe and derives a significant
portion of its income from international markets. These operations
are susceptible to various risks such as war, civil disturbances
and government actions. Any disturbance in the international
markets will likely impact the company's performance level.
Moreover, the company remains vulnerable to volatile natural gas
prices, imbalance in the demand-supply of rigs in the U.S. land
drilling market and a weak balance sheet.
Canadian energy firm
Suncor Energy Inc.
) and Philadelphia, Pennsylvania based
) are also slated to release their second quarter results
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