Discounted Cash Flow Calculation for DB:NBI using 2 Stage Free Cash Flow to Equity Model
The calculations below outline how an intrinsic value for
is arrived at by discounting future cash flows to their present value using the 2 stage method.
We try to start with analysts estimates of free cash flow, however if these are not available we use the most recent financial results. In the 1st stage we continue to grow the free cash flow over a 10 year period, with the growth rate trending towards the perpetual growth rate used in the 2nd stage. The 2nd stage assumes the company grows at a stable rate into perpetuity.
Note: Free cash flow to equity valuations ignore the company's cash or debt.
DB:NBI DCF 1st Stage: Next 10 year cash flow forecast
Amount off the current price
is available for.
Share price is
vs Future cash flow value of
Current Discount Checks
to be considered undervalued it must be available for at least 20% below the
current price. Less than 40% is even better.
Nabors Industries's share price is below the future cash flow value, and at a moderate discount (> 20%).
Nabors Industries's share price is below the future cash flow value, and at a substantial discount (> 40%).
PRICE RELATIVE TO MARKET
We can also value a company based on what the stock market is willing to pay for
it. This is similar to the price of fruit (e.g. Mangoes or Avocados) increasing
when they are out of season, or how much your home is worth.
The amount the stock market is willing to pay for
is considered below, and whether this is a fair price.
Price based on past earnings
Nabors Industries's earnings available for a low price, and how does
this compare to other companies in the same industry?
Nabors Industries is not considered high growth as it is expected to be loss making for the next 1-3 years.
Nabors Industries's revenue is expected to decrease over the next 1-3 years, this is not considered high growth.
Past and Future Earnings per Share
The accuracy of the analysts who estimate the future performance data can
be gauged below. We look back 3 years and see if they were any good at
predicting what actually occurred. We also show the highest and lowest estimates
looking forward to see if there is a wide range.
Nabors Industries's performance over the past 5 years by checking for:
Has earnings increased in past 5 years? (1 check)
Has the earnings growth in the last year exceeded that of the
industry? (1 check)
Is the recent earnings growth over the last year higher than the average annual growth over the
past 5 years? (1 check)
Is the Return on Equity (ROE) higher than 20%? (1 check)
Is the Return on Assets (ROA) above industry average? (1 check)
Has the Return on Capital Employed (ROCE) increased from 3 years ago? (1 check)
The above checks will fail if the company has reported a loss in the most recent
earnings report. Some checks require at least 3 or 5 years worth of data.
has a total score of
0/6, see the detailed checks below.
Note: We use GAAP Net Income excluding extraordinary items in all our calculations.
A company's financial position is much like your own financial position,
it includes everything you own
The boxes below represent the relative size of what makes up
Nabors Industries's finances.
The net worth of a company is the difference between its assets and liabilities.
Nabors Industries is able to meet its short term (1 year) commitments with its holdings of cash and other short term assets.
Nabors Industries's long term commitments exceed its cash and other short term assets.
This treemap shows a more detailed breakdown of
Nabors Industries's finances. If any of them are yellow this
indicates they may be out of proportion and red means they relate to one of the
Liabilities and shares
The 'shares' portion represents any funds contributed by the owners (shareholders) and any profits.
High level of physical assets or inventory.
Debt is not covered by short term assets, assets are 0.4x debt.
Nearly all companies have debt. Debt in itself isn’t
however if the debt is too high, or the company can’t afford to pay the interest
on its debts this may have impacts in the future.
The graphic below shows equity (available funds) and debt, we ideally want to
see the red area (debt) decreasing.
If there is any debt we look at the companies capability to repay it, and
whether the level has increased over the past 5 years.
Management is one of the most important areas of a company. We look at
unreasonable CEO compensation, how long the team and board of directors have
been around for and insider trading.
TENURE AS CEO
Mr. Anthony G. Petrello, also known as Tony, has been the Chief Executive Officer of Nabors Industries Ltd., a holding company of Nabors Exchangeco (Canada) Inc since October 28, 2011 and its President since 1991. Mr. Petrello serves as the Chief Executive Officer at Nabors Industries, Inc. He served as the Chief Operating Officer of Nabors Industries Ltd. since 1991 until October 2011. From 1979 to 1991, he was with the law firm Baker & McKenzie, where he served as Managing Partner of its New York Office from 1986 to 1991. Mr. Petrello has been the Chairman of the Board at Nabors Industries Ltd. since June 2012. He served as Deputy Chairman of Nabors Industries Ltd. from 2003 to June 2012. He has been a Director of Stewart & Stevenson, LLC since February 28, 2011 and Nabors Industries Ltd. since 1991. He serves as a Director of Texas Children's Hospital, Inc. He served as a Director of MediaOnDemand.com. Mr. Petrello holds a J.D. degree from Harvard Law School and B.S. and M.S. degrees in Mathematics from the Yale University.
Anthony's compensation has increased whilst company is loss making.
Anthony's remuneration is higher than average for companies of similar size in Germany.
Management Team Tenure
Average tenure and age of the
management team in years:
The average tenure for the Nabors Industries management team is over 5 years, this suggests they are a seasoned and experienced team.
Chief Financial Officer
VP & Chief Accounting Officer
Senior VP of Corporate Development & Investor Relations
Senior VP & Chief Human Capital Officer
Senior Vice President of Western Hemisphere Operations
Senior Vice President of Eastern Hemisphere Operations
Board of Directors Tenure
Average tenure and age of the
board of directors in years:
The tenure for the Nabors Industries board of directors is about average.
Board of Directors
Who owns this company?
Recent Insider Trading
More shares have been bought than sold by Nabors Industries individual insiders in the past 3 months, but not in substantial volumes.
Nabors Industries Ltd. provides drilling and drilling-related services for land-based and offshore oil and natural gas wells. It operates through five segments: U.S. Drilling, Canada Drilling, International Drilling, Drilling Solutions, and Rig Technologies. The company offers tubular running, wellbore placement, directional drilling, measurement-while-drilling (MWD), equipment manufacturing, and rig instrumentation services; logging-while-drilling systems and services; and an optimization software. Its drilling tools include Acculine MWD tool for well-site handling; AccuSteer tool for downhole drilling dynamics measurements, and annular and bore pressure applications; and AccuMP MWD tool that provides accurate survey, gamma, and continuous inclination data; In addition, the company offers AccuWave, an electromagnetic MWD system for use in various drilling fluid environments; Navigator collaborative guidance and advisory platform that delivers automated directional drilling information and instructions; ROCKit, a directional steering control system; and REVit, an automated real time stick-slip mitigation system. Further, it manufactures and sells top drives, catwalks, wrenches, draw works, and other drilling related equipment, such as robotic systems and downhole tools; and provides automated tubular and tool handling equipment. As of December 31, 2019, the company marketed approximately 366 rigs for land-based drilling operations in the United States and Canada, as well as in 16 other countries worldwide; and 33 rigs for offshore drilling operations in the United States and internationally. Nabors Industries Ltd. was founded in 1952 and is headquartered in Hamilton, Bermuda.
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