A month has gone by since the last earnings report for Noble Corp. (NE). Shares have lost about 10.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Noble Corp. due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Noble Q3 Loss Narrower Than Expected
Noble Corporation plc reported third-quarter 2018 loss of 43 cents per share, excluding non-cash change, narrower than the Zacks Consensus Estimate of 47 cents and the year-ago quarter's adjusted loss of 36 cents. Increase in total rig utilization and dayrates led to the improvement.
Total revenues in the quarter grew to $279 million from $266 million in the year-ago quarter. Also, the top line beat the Zacks Consensus Estimate of $259 million, courtesy of higher sales from Contract Drilling Services.
Net loss from continuing operations was $81.6 million, narrower than $96.8 million in the third quarter of 2017. Total rig utilization increased to 69% from the year-earlier quarter's level of 60%. However, overall average dayrate rose to $174,665 from $168,127 in the year-ago quarter.
The average dayrate for Drillships of $298,443 was higher than $286,819 recorded in the prior-year quarter. The average capacity utilization increased to 63% from 56% in the year-ago quarter.
The average dayrate for the company's jackups fell to $122,350 from $127,163 in the prior-year quarter. Nevertheless, average capacity utilization increased to 93% from the year-ago quarter's level of 81%.
The average dayrate for the company's semisubmersibles was $99,470, lower than $104,028 in the prior-year quarter. On the flip side, average capacity utilization fell to 11% from the year-ago quarter’s 17%.
As of Sep 30, 2018, 7% of the company's available rig operating days were committed for fourth quarter of 2018, including 55% of floating rig days and 93% of jackup rig days. For 2019, about 45% of the available rig days were committed, including 37% of the floating rig days and 53% of the jackup rig days.
Cost of contract drilling services fell nearly 2% year over year to $163 million.
As of Sep 30, 2018, total backlog was approximately $2.5 billion.
Capital Expenditure & Balance Sheet
In the third quarter, the company’s capital expenditure came in at $136 million.
At the end of the reported quarter, the company had a cash balance of $326.3 million and long-term debt of $3.9 billion, with a debt-to-capitalization ratio of 45.4%.
Outlook & Guidance
The company expects more contracts to follow with the rising crude prices as several projects will turn out to be profitable. It can lead to more opportunities for the offshore drilling contractor.
For 2018, the company raised capital expenditure projection to about $280 million from $150 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
Currently, Noble Corp. has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% 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.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions looks promising. Notably, Noble Corp. has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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