It might be of some concern to shareholders to see the Nabors Industries Ltd. (NYSE:NBR) share price down 27% in the last month. But that doesn’t change the fact that the returns over the last year have been spectacular. In fact, it is up 459% in that time. So the recent fall isn’t enough to negate the good performance. The real question is whether the fundamental business performance can justify the strong increase over the long term.
Check out our latest analysis for Nabors Industries
Given that Nabors Industries didn’t make a profit in the last twelve months, we’ll focus on revenue growth to form a quick view of its business development. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
Nabors Industries actually shrunk its revenue over the last year, with a reduction of 30%. This is in stark contrast to the splendorous stock price, which has rocketed 459% since this time a year ago. It’s pretty clear the market isn’t basing its valuation on fundamental metrics like revenue. While this gain looks like speculative buying to us, sometimes speculation pays off.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
Take a more thorough look at Nabors Industries’ financial health with this free report on its balance sheet.
A Different Perspective
It’s good to see that Nabors Industries has rewarded shareholders with a total shareholder return of 459% in the last twelve months. There’s no doubt those recent returns are much better than the TSR loss of 13% per year over five years. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. It’s always interesting to track share price performance over the longer term. But to understand Nabors Industries better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We’ve identified 2 warning signs with Nabors Industries , and understanding them should be part of your investment process.
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Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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