Yahoo Finance Bull of the Day: Weatherford International (WFRD)
Oil field services and equipment provider Weatherford International (WFRD) is standing out among a dominant industry sporting a Zacks Rank #1 (Strong Buy).
While the Zacks Oils & Energy Sector is currently ranked 14th out of 16 industries, Weatherford International’s Oil and Gas – Field Services Industry is currently in the top 22% of over 250 Zacks Industries.
Studies show that much of a stock's future appreciation is attributed to the company’s ability to benefit from a booming business industry, which should benefit Weatherford International. This also helps investors differentiate and select sound investments among oil and energy stocks after many of these equities have outperformed the broader market over the last few years.
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Still, with oil prices remaining high relative to historical levels (currently at $79 a barrel) there is an abundance of upside remaining for select companies and industries. Weatherford International, for example, is showing continued momentum after securing over $6.5 billion worth of contracts in 2022.
Furthermore, past performance is not always an indicator of future success, and after being delisted from the New York Stock Exchange in 2019 and trading on the OTC Pink Market, Weatherford International was added to the Nasdaq in 2021 and is now up over 400%.
Weatherford is carving a unique niche in the industry with its drilling solutions, gas well unloading, and restoration among other services.
Redemption & Operational Highlights
Weatherford blasted Q4 bottom-line expectations last week by 33% with earnings at $1.12 per share compared to -$0.63 in Q4 2021. Fourth quarter revenue was $1.20 billion up 24% year over year. Operating Income was at $169 million, up 6% from the third quarter and 290% YoY.
Overall, Weatherford posted many significant milestones in 2022:
It was the first time in over three decades that positive free cash flow was generated for three consecutive years. Weatherford achieved its lowest net leverage ratio in more than 15 years. It also grew its revenue year-over-year by 19% for the highest growth rate in over 10 years And it generated a positive net income of $26 million, a first in 10 years.
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After capping off fiscal 2022 with a strong fourth quarter, Weatherford highlighted the diverse regions in which it has secured operational services. This included a five-year contract with Kuwait Oil company to provide directional drilling and logging while drilling services, providing fit-for-purpose solutions.
Weatherford anonymously announced another major integrated oil company (IOC) in the middle east awarded the company with a five-year contract to provide “fishing” equipment and services.
Also, the company inked a two-year, sole-provider contract with Petrobras S.A. (PBR) for the provision of Weatherford’s newly enhanced chemical injection system to help solve some of the drilling issues Petrobras is facing in Brazil.
In addition to this, Weatherford stated it was awarded three other contracts in Latin America to deliver integrated drilling and completing services in onshore and offshore operations, including shallow water developments and exploration wells.
Earnings Estimate Revisions
For Weatherford, a booming business environment leads to lucrative contracts, and this correlates with rising earnings estimate revisions which is another significant catalyst in the upward movement of a stock.
On that note, Weatherford’s fiscal 2023 earnings estimates have gone up 44% to $3.99 per share in the last week following its fourth-quarter report. Fiscal 2024 earnings estimates have gone up 40% to $5.59 per share over the last seven days.
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Takeaway
Weatherford International’s Growth and Momentum are very intriguing at the moment, scoring an “A” Zacks Style Scores grade in both of these complementary stock trading indicators alongside its impressive Zacks Rank #1 (Strong Buy).
Also, with WFRD stock trading at 16.7X forward earnings and estimates on the rise, this is getting the company closer to the industry average of 13.6X. This is also well below its high of 169.7X since being publicly traded again along with its stock performance topping most of its peers.
Management is effectively deploying its turnaround initiatives, and showing the ability to secure meaningful contracts that can boost the company’s top and bottom lines which could certainly lead to more upside in Weatherford International’s stock.
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Weatherford International PLC (WFRD) : Free Stock Analysis Report
Petroleo Brasileiro S.A.- Petrobras (PBR) : Free Stock Analysis Report
