Why Is Noble Corp. (NE) Down 61.1% Since Last Earnings Report?

A month has gone by since the last earnings report for Noble Corp. (NYSE:NE). Shares have lost about 61.1% 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 the most recent earnings report in order to get a better handle on the important drivers.

Noble Beats Q4 Earnings Estimates, Gives Positive Outlook

Noble Corporation reported fourth-quarter 2019 loss of 33 cents per share, excluding one-time items, narrower than the Zacks Consensus Estimate of a loss of 50 cents. The quarterly loss was also narrower than the year-ago loss of 36 cents per share.

Total revenues increased to $454 million from $310 million in the prior-year quarter. Quarterly revenues also beat the Zacks Consensus Estimate of $262 million.

The company’s better-than-expected results were supported by a year-over-year increase in total rig fleet utilization and average dayrate.

Operating Highlights

Total average rig utilization increased to 77% from the year-ago level of 75%. Moreover, overall average dayrate increased to $250,760 from $176,443 in the year-ago quarter. Overall operating days increased to 1,760 from 1,655 in the year-ago period.

The average dayrate for the company's jackups was $129,898, up from $121,949 in the prior-year quarter. However, average capacity utilization dropped to 93% from the year-ago level of 94%.

The average dayrate for its floaters was $450,362 compared with $267,737 in the prior-year quarter. Moreover, average capacity utilization rose to 60% from the year-ago level of 56%.

Costs & Expenses

Total contract drilling service costs increased to $181.8 million in the quarter from $178.7 million in the year-ago period. General and administrative costs rose to $18.9 million from $14.7 million in fourth-quarter 2018.

Backlog

As of Dec 31, 2019, the offshore drilling contractor’s total revenue backlog was reported at roughly $1.5 billion.

Financials

Capital expenditure in the reported quarter totaled $48 million.

At the end of the fourth quarter, the company had cash balance of $104.6 million and long-term debt of $3,779.5 million, with a debt-to-capitalization ratio of 51.2%.

Outlook

Noble hasn’t noticed any changes in explorers’ spending patterns although the outbreak of coronavirus in China has dented global energy demand. With the contracted floating and jackup rig counts rising in 2019, the company is optimistic that the robust offshore drilling activities will continue in 2020. Notably, in the Middle East and Asia, the company expects opportunities for premium jackups to remain bright. Demand for floating rig fleet will also remain impressive since there has a rise in interest among the upstream energy players for prolific offshore resources in regions like Guyana, Suriname, Brazil and Mexico.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 24.19% due to these changes.

VGM Scores

At this time, Noble Corp. has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, 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.

Outlook

Estimates have been trending upward 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.