Why Is Noble (NE) Up 4.5% Since Its Last Earnings Report?

A month has gone by since the last earnings report for Noble Corporation NE. Shares have added about 4.5% in that time frame.

Will the recent positive trend continue leading up to its next earnings release, or is NE due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Fourth-Quarter 2017 Results

Noble Corporation reported fourth-quarter 2017 loss of 29 cents per share, narrower than the Zacks Consensus Estimate of a loss of 32 cents. However, the figure was wider than the year-ago quarter’s loss of 15 cents.

Total revenues in the quarter declined to $329.6 million from $410.2 million in the comparable quarter last year. However, quarterly revenues beat the Zacks Consensus Estimate of $284 million. Contract Drilling Services plunged 20% year over year and contributed $321.1 million to total revenues.

Lower dayrates for drillships as well as lesser utilizations for drillships and jack ups affected the results.
 
In 2017, the company reported a loss of $1.14 per share, narrower than the Zacks Consensus Estimate of a loss of $1.15. The leading contract drilling company reported a loss of 5 cents in 2016.

Total revenues for the full year declined to $1,236.9 million from $2,302.1 million in 2016. Nonetheless, the figure beat the Zacks Consensus Estimate of $1,200.0 million.

Q4 Operating Highlights

Net loss from continuing operations was $13 million, much narrower than the net loss of $1,283.2 million in the fourth quarter of 2016. Total rig utilization declined to 58% from the year-ago quarter’s level of 62%. The overall average dayrate declined to $213,664 from $238,704 in the year-ago quarter.

The average dayrate for drillships of $378,709 was substantially lower than $474,462 in the prior-year quarter. Average capacity utilization was 60% compared with 73% in the year-ago quarter.

The average dayrate for the company's jackups was $134,413 compared with $124,470 in the prior-year quarter. Average capacity utilization declined to 76% from the year-ago quarter’s level of 86%.

The average dayrate for the company's semi-submersibles was $261,661 compared with $166,253 in the prior-year quarter. Average capacity utilization increased to 17% from the year-ago quarter’s level of 13%.

Backlog

As of Dec 31, 2017, total backlog was approximately $3 billion.

Financials

At the end of the fourth quarter, the company had a cash balance of $663 million and long-term debt of $3,795.8 million, with debt-to-capitalization ratio of 41.8% compared with 38.4% in the year-ago quarter.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. There have been six revisions lower for the current quarter.

Noble Corporation Price and Consensus

 

Noble Corporation Price and Consensus | Noble Corporation Quote

VGM Scores

At this time, NE has a poor Growth Score of F. Its Momentum is doing a bit better with a D. The stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

The company's stock is suitable solely for value based on our styles scores.

Outlook

Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. It's no surprise NE has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.

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