SDLP Seadrill Partners LLC

Shares of Nabors Industries Ltd. (NBR) hit a 52-week high of $22.77 on Feb 20. In fact, the Hamilton, Bermuda-based onshore contract driller has seen its stock price climb some 20% over the past five days. This price appreciation can be attributed to the recent better-than-expected earnings report.

Why the Bullishness?

Nabors, which ranks ahead of Patterson-UTI Energy Inc. (PTEN) as the largest North American onshore contractor, has a large, high-quality fleet of drilling and workover rigs. Over the years, the company has grown through cash flow reinvestments and acquisitions. In the process, Nabors has not only increased its rig fleet, but also extended its geographic reach and diversified its operating assets beyond land rigs.

Nabors reported fourth quarter earnings from continuing operations (excluding tax benefits) of 26 cents on Feb 18, beating the Zacks Consensus Estimate by 30%. Revenues of $1,606.5 million were also up from the previous-year figure of $1,602.0 million. The outperformance was primarily due to impressive gains from international operations. Shares of the company popped more than 13% on Wednesday following the stellar numbers.

Finally, we welcome Nabors’ last year’s announcement to start paying out a portion of its earnings in the form of shareholder dividends. We believe that the dividend start-up not only highlights Nabors’ commitment to create value for shareholders but also underlines the energy equipment supplier’s confidence in its business going forward.

Zacks Rank & Stock Picks

With Nabors shares trading at 52-week high, any upside from here may be limited, as suggested by the company's Zacks Rank #3 (Hold).

Some better-ranked stocks in the ‘Oil & Gas Drilling’ sector include Helmerich & Payne Inc. (HP) and Seadrill Partners LLC (SDLP). Both of them carry a Zacks Rank #1 (Strong Buy).
 

 
HELMERICH&PAYNE (HP): Free Stock Analysis Report
 
NABORS IND (NBR): Free Stock Analysis Report
 
PATTERSON-UTI (PTEN): Free Stock Analysis Report
 
SEADRILL PTNRS (SDLP): Free Stock Analysis Report
 
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