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Weatherford International plc Message Board

  • somebodydothemath somebodydothemath Dec 17, 2012 10:56 AM Flag

    WFT stock prise to climb

    After all the noise settles down this morning, watch for a steady and continous climb in the stock prise to its fair value of around $19.50

    Sentiment: Strong Buy

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    • Probably not $19, but it's a good bet that it will jump over $13 in January. Between the fiscal cliff being settled and buyout rumors, it's going to run up as this is not an $11 stock in all reality and
      investors will soon realize that. As far as going back to $8 or $9 or even $10 thats not going to
      happen. If you shorted this stock you'd better pull the trigger before it pops during this slow and
      easy ride up.

      Sentiment: Strong Buy

    • Wishful thinking that fair value is around $19.50. EBITDA LTM is $1,509 but that includes a wash out 2Q 2012 where EBITDA was -$354. I'll be generous and throw that one out and use the average EBITDA for 4Q11, 1Q12, and 3Q 12 to serve as the revised 2Q12 EBITDA.

      Doing that gives a new EBITDA LTM of $2,484. Based on 3Q balance sheet and today's closing stock price the Enterprise Value for WFT is $16,686 giving an EV / EBITDA ratio of 6.7x.

      SLB, the industry leader, is around 8.5x or so. BHI and HAL are both under 6x. Let's be real stupid and give WFT the same multiple as SLB. If you do that, the stock price would be "fairly valued" at ~$16.50. This is a big increase from today's $10.65, but remember that valuation is based on WFT being valued to perfection. If management has shown us anything it's that you should not expect perfection.

      WFT deserves to trade at a significant discount to its peers due to all the mishaps and its poor capital structure. Fair value with some margin of safety is more likely in the $8.50 - $9.00 range. I doubt that's where it will go, but at today's stock price it certainly is not as "cheap" as most would believe.

      • 1 Reply to count_my_blessings
      • Dream on dude. If you dont like it short it big man. I think not as this isnt accounting fraud this is just because they do work in many different places all with different laws. Like transocean just got hit with and vale an many others hit by brazil even worse. These countries trying to get some extra cash and why not. However the last year or more they have been doing earnings with a 45% tax rate so when adjusted they will be better than one would think. We will see as I have not sold yet and plan on selling around 18-20 or eat it so I will stay long and you can short down to 8 bucks because you know thats not going to happen unless everyone falls off cliff.

        Sentiment: Strong Buy

    • How do you arrive at fair value when you don't have good numbers to gauge anything on? Did you pay 19.50 for the stock?

6.47+0.41(+6.77%)Feb 12 4:00 PMEST