Must-know: Noble gives a weak outlook for offshore drillers (Part 1 of 6)
Noble Corp. reports $0.82 a share
Noble Corp. (NE) is one of the largest off-shore drillers, with 77 rigs in operation, stacked, or under construction. The company, which released its fourth quarter of fiscal year 2013’s earnings on January 23, 2014, reported diluted earnings of $0.82 a share, after accounting for one-time charges. This was lower than $0.85-a-share reported during the third quarter of fiscal year 2013. It is, however, higher than $0.51-a-share seen during the fourth quarter of fiscal year 2012.
Exclude one-time charges
Earnings are often adjusted for one-time charges, because the value of a company is largely based on a business’s future cash flow or earnings. Since one-time charges theoretically shouldn’t reppeat, and analysts rarely have the ability to account for such events, they’re often carved out of the picture. However, investors should keep in mind that if these so called “one-time events” do happen quite often, they should question management’s accounting practices or take into account its impact on future earnings.
While earnings have been rising, Noble and its peers have underperformed the S&P 500. Shares barely rose in 2013. Despite beating Wall Street analysts’ estimates of $0.81 a share for the fourth quarter of fiscal year 2013, Noble Corp. (NE) fell ~8.0% the next day, dragging other off-shore drillers like Transocean Ltd. (RIG), Diamond Offshore Inc. (DO), Ensco Plc. (ESV), and Seadrill Ltd. (SDRL) along with it.
To learn more about Noble’s business, see A must-know investor’s guide to off-shore driller Noble Corp.
Browse this series on Market Realist:
- Part 2 - Breaking down Noble’s 8% quarterly increase in core revenue
- Part 3 - Noble echoes Transocean on a soft short-term outlook for floaters
- Part 4 - Noble shows a more positive long-term deepwater market outlook
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