Intrinsic value of Nabors Industries - NBR

Previous Close

$6.65

  Intrinsic Value

$2.79

stock screener

  Rating & Target

str. sell

-58%

  Value-price divergence*

-30%

Previous close

$6.65

 
Intrinsic value

$2.79

 
Up/down potential

-58%

 
Rating

str. sell

 
Value-price divergence*

-30%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of NBR stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 1.8

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -42.36
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  2,229
  2,274
  2,326
  2,386
  2,453
  2,527
  2,609
  2,698
  2,794
  2,897
  3,009
  3,127
  3,254
  3,390
  3,533
  3,686
  3,847
  4,018
  4,199
  4,390
  4,592
  4,804
  5,029
  5,265
  5,515
  5,777
  6,054
  6,345
  6,651
  6,973
  7,312
Variable operating expenses, $m
 
  1,443
  1,476
  1,514
  1,556
  1,602
  1,654
  1,709
  1,770
  1,835
  1,905
  1,963
  2,042
  2,127
  2,217
  2,313
  2,414
  2,521
  2,635
  2,755
  2,881
  3,015
  3,156
  3,304
  3,461
  3,625
  3,799
  3,981
  4,173
  4,376
  4,588
Fixed operating expenses, $m
 
  1,665
  1,706
  1,749
  1,793
  1,837
  1,883
  1,930
  1,979
  2,028
  2,079
  2,131
  2,184
  2,239
  2,295
  2,352
  2,411
  2,471
  2,533
  2,596
  2,661
  2,728
  2,796
  2,866
  2,937
  3,011
  3,086
  3,163
  3,242
  3,323
  3,406
Total operating expenses, $m
  2,999
  3,108
  3,182
  3,263
  3,349
  3,439
  3,537
  3,639
  3,749
  3,863
  3,984
  4,094
  4,226
  4,366
  4,512
  4,665
  4,825
  4,992
  5,168
  5,351
  5,542
  5,743
  5,952
  6,170
  6,398
  6,636
  6,885
  7,144
  7,415
  7,699
  7,994
Operating income, $m
  -770
  -834
  -857
  -877
  -896
  -913
  -928
  -942
  -955
  -966
  -975
  -966
  -972
  -976
  -979
  -979
  -978
  -974
  -969
  -961
  -951
  -938
  -923
  -904
  -883
  -859
  -831
  -800
  -765
  -726
  -683
EBITDA, $m
  104
  -141
  -148
  -150
  -149
  -144
  -135
  -123
  -107
  -87
  -63
  -35
  -3
  33
  73
  118
  167
  221
  281
  345
  416
  492
  574
  663
  758
  861
  970
  1,088
  1,214
  1,349
  1,493
Interest expense (income), $m
  184
  183
  188
  194
  201
  208
  217
  226
  236
  247
  259
  271
  285
  299
  314
  331
  348
  366
  385
  406
  428
  450
  475
  500
  527
  555
  585
  616
  649
  684
  720
Earnings before tax, $m
  -1,198
  -1,017
  -1,045
  -1,071
  -1,096
  -1,121
  -1,145
  -1,168
  -1,191
  -1,212
  -1,234
  -1,237
  -1,257
  -1,275
  -1,293
  -1,310
  -1,326
  -1,341
  -1,354
  -1,367
  -1,378
  -1,388
  -1,397
  -1,404
  -1,410
  -1,414
  -1,416
  -1,416
  -1,414
  -1,410
  -1,403
Tax expense, $m
  -187
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  -1,030
  -1,017
  -1,045
  -1,071
  -1,096
  -1,121
  -1,145
  -1,168
  -1,191
  -1,212
  -1,234
  -1,237
  -1,257
  -1,275
  -1,293
  -1,310
  -1,326
  -1,341
  -1,354
  -1,367
  -1,378
  -1,388
  -1,397
  -1,404
  -1,410
  -1,414
  -1,416
  -1,416
  -1,414
  -1,410
  -1,403

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  295
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  8,187
  8,062
  8,248
  8,460
  8,698
  8,961
  9,251
  9,566
  9,907
  10,274
  10,669
  11,090
  11,540
  12,020
  12,529
  13,069
  13,642
  14,248
  14,890
  15,567
  16,282
  17,037
  17,833
  18,672
  19,556
  20,487
  21,467
  22,499
  23,585
  24,727
  25,928
Adjusted assets (=assets-cash), $m
  7,892
  8,062
  8,248
  8,460
  8,698
  8,961
  9,251
  9,566
  9,907
  10,274
  10,669
  11,090
  11,540
  12,020
  12,529
  13,069
  13,642
  14,248
  14,890
  15,567
  16,282
  17,037
  17,833
  18,672
  19,556
  20,487
  21,467
  22,499
  23,585
  24,727
  25,928
Revenue / Adjusted assets
  0.282
  0.282
  0.282
  0.282
  0.282
  0.282
  0.282
  0.282
  0.282
  0.282
  0.282
  0.282
  0.282
  0.282
  0.282
  0.282
  0.282
  0.282
  0.282
  0.282
  0.282
  0.282
  0.282
  0.282
  0.282
  0.282
  0.282
  0.282
  0.282
  0.282
  0.282
Average production assets, $m
  6,633
  6,766
  6,922
  7,100
  7,299
  7,521
  7,764
  8,028
  8,314
  8,622
  8,953
  9,307
  9,685
  10,087
  10,515
  10,968
  11,449
  11,958
  12,496
  13,064
  13,665
  14,298
  14,966
  15,670
  16,412
  17,193
  18,016
  18,882
  19,793
  20,751
  21,760
Working capital, $m
  334
  39
  40
  41
  42
  43
  44
  46
  47
  49
  51
  53
  55
  58
  60
  63
  65
  68
  71
  75
  78
  82
  85
  90
  94
  98
  103
  108
  113
  119
  124
Total debt, $m
  3,579
  3,686
  3,802
  3,935
  4,084
  4,249
  4,430
  4,627
  4,841
  5,071
  5,317
  5,582
  5,863
  6,163
  6,482
  6,820
  7,179
  7,559
  7,960
  8,384
  8,832
  9,304
  9,802
  10,328
  10,881
  11,464
  12,077
  12,723
  13,403
  14,118
  14,870
Total liabilities, $m
  4,940
  5,047
  5,163
  5,296
  5,445
  5,610
  5,791
  5,988
  6,202
  6,432
  6,678
  6,943
  7,224
  7,524
  7,843
  8,181
  8,540
  8,920
  9,321
  9,745
  10,193
  10,665
  11,163
  11,689
  12,242
  12,825
  13,438
  14,084
  14,764
  15,479
  16,231
Total equity, $m
  3,247
  3,015
  3,085
  3,164
  3,253
  3,352
  3,460
  3,578
  3,705
  3,843
  3,990
  4,148
  4,316
  4,495
  4,686
  4,888
  5,102
  5,329
  5,569
  5,822
  6,090
  6,372
  6,670
  6,983
  7,314
  7,662
  8,029
  8,415
  8,821
  9,248
  9,697
Total liabilities and equity, $m
  8,187
  8,062
  8,248
  8,460
  8,698
  8,962
  9,251
  9,566
  9,907
  10,275
  10,668
  11,091
  11,540
  12,019
  12,529
  13,069
  13,642
  14,249
  14,890
  15,567
  16,283
  17,037
  17,833
  18,672
  19,556
  20,487
  21,467
  22,499
  23,585
  24,727
  25,928
Debt-to-equity ratio
  1.102
  1.220
  1.230
  1.240
  1.260
  1.270
  1.280
  1.290
  1.310
  1.320
  1.330
  1.350
  1.360
  1.370
  1.380
  1.400
  1.410
  1.420
  1.430
  1.440
  1.450
  1.460
  1.470
  1.480
  1.490
  1.500
  1.500
  1.510
  1.520
  1.530
  1.530
Adjusted equity ratio
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -1,030
  -1,017
  -1,045
  -1,071
  -1,096
  -1,121
  -1,145
  -1,168
  -1,191
  -1,212
  -1,234
  -1,237
  -1,257
  -1,275
  -1,293
  -1,310
  -1,326
  -1,341
  -1,354
  -1,367
  -1,378
  -1,388
  -1,397
  -1,404
  -1,410
  -1,414
  -1,416
  -1,416
  -1,414
  -1,410
  -1,403
Depreciation, amort., depletion, $m
  874
  693
  709
  727
  747
  769
  793
  819
  848
  879
  912
  931
  969
  1,009
  1,051
  1,097
  1,145
  1,196
  1,250
  1,306
  1,366
  1,430
  1,497
  1,567
  1,641
  1,719
  1,802
  1,888
  1,979
  2,075
  2,176
Funds from operations, $m
  624
  -324
  -336
  -344
  -350
  -352
  -352
  -349
  -343
  -334
  -321
  -306
  -288
  -266
  -241
  -213
  -181
  -145
  -105
  -61
  -12
  41
  99
  163
  231
  306
  386
  472
  565
  666
  773
Change in working capital, $m
  92
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
Cash from operations, $m
  532
  -324
  -337
  -345
  -351
  -354
  -353
  -350
  -344
  -335
  -323
  -308
  -290
  -269
  -244
  -216
  -184
  -148
  -108
  -64
  -15
  38
  96
  159
  227
  301
  381
  467
  560
  660
  767
Maintenance CAPEX, $m
  0
  -663
  -677
  -692
  -710
  -730
  -752
  -776
  -803
  -831
  -862
  -895
  -931
  -969
  -1,009
  -1,051
  -1,097
  -1,145
  -1,196
  -1,250
  -1,306
  -1,366
  -1,430
  -1,497
  -1,567
  -1,641
  -1,719
  -1,802
  -1,888
  -1,979
  -2,075
New CAPEX, $m
  -395
  -133
  -156
  -178
  -200
  -221
  -243
  -264
  -286
  -308
  -331
  -354
  -378
  -402
  -427
  -454
  -481
  -509
  -538
  -569
  -600
  -633
  -668
  -704
  -742
  -781
  -823
  -866
  -911
  -959
  -1,008
Cash from investing activities, $m
  -382
  -796
  -833
  -870
  -910
  -951
  -995
  -1,040
  -1,089
  -1,139
  -1,193
  -1,249
  -1,309
  -1,371
  -1,436
  -1,505
  -1,578
  -1,654
  -1,734
  -1,819
  -1,906
  -1,999
  -2,098
  -2,201
  -2,309
  -2,422
  -2,542
  -2,668
  -2,799
  -2,938
  -3,083
Free cash flow, $m
  150
  -1,121
  -1,169
  -1,215
  -1,261
  -1,305
  -1,348
  -1,391
  -1,433
  -1,475
  -1,517
  -1,558
  -1,599
  -1,639
  -1,680
  -1,721
  -1,761
  -1,801
  -1,842
  -1,882
  -1,922
  -1,962
  -2,002
  -2,042
  -2,082
  -2,121
  -2,161
  -2,200
  -2,239
  -2,278
  -2,316
Issuance/(repayment) of debt, $m
  -70
  107
  116
  133
  149
  165
  181
  197
  213
  230
  247
  264
  282
  300
  319
  338
  359
  380
  401
  424
  448
  472
  498
  525
  553
  583
  614
  646
  680
  715
  752
Issuance/(repurchase) of shares, $m
  -1
  1,080
  1,114
  1,150
  1,185
  1,220
  1,253
  1,286
  1,318
  1,350
  1,381
  1,395
  1,425
  1,454
  1,483
  1,512
  1,540
  1,567
  1,594
  1,620
  1,646
  1,671
  1,695
  1,718
  1,740
  1,762
  1,782
  1,802
  1,820
  1,837
  1,852
Cash from financing (excl. dividends), $m  
  -87
  1,187
  1,230
  1,283
  1,334
  1,385
  1,434
  1,483
  1,531
  1,580
  1,628
  1,659
  1,707
  1,754
  1,802
  1,850
  1,899
  1,947
  1,995
  2,044
  2,094
  2,143
  2,193
  2,243
  2,293
  2,345
  2,396
  2,448
  2,500
  2,552
  2,604
Total cash flow (excl. dividends), $m
  61
  66
  61
  68
  74
  80
  86
  92
  99
  105
  111
  101
  108
  115
  122
  130
  137
  145
  154
  163
  172
  181
  191
  201
  212
  223
  235
  248
  260
  274
  288
Retained Cash Flow (-), $m
  1,036
  -1,080
  -1,114
  -1,150
  -1,185
  -1,220
  -1,253
  -1,286
  -1,318
  -1,350
  -1,381
  -1,395
  -1,425
  -1,454
  -1,483
  -1,512
  -1,540
  -1,567
  -1,594
  -1,620
  -1,646
  -1,671
  -1,695
  -1,718
  -1,740
  -1,762
  -1,782
  -1,802
  -1,820
  -1,837
  -1,852
Prev. year cash balance distribution, $m
 
  295
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  -719
  -1,053
  -1,083
  -1,112
  -1,140
  -1,167
  -1,194
  -1,220
  -1,245
  -1,270
  -1,294
  -1,317
  -1,339
  -1,361
  -1,382
  -1,402
  -1,422
  -1,440
  -1,458
  -1,474
  -1,490
  -1,504
  -1,517
  -1,528
  -1,539
  -1,547
  -1,554
  -1,559
  -1,563
  -1,564
Discount rate, %
 
  8.40
  8.82
  9.26
  9.72
  10.21
  10.72
  11.26
  11.82
  12.41
  13.03
  13.68
  14.37
  15.09
  15.84
  16.63
  17.46
  18.34
  19.25
  20.22
  21.23
  22.29
  23.40
  24.57
  25.80
  27.09
  28.45
  29.87
  31.36
  32.93
  34.58
PV of cash for distribution, $m
 
  -663
  -889
  -830
  -767
  -701
  -633
  -566
  -499
  -434
  -373
  -316
  -263
  -216
  -174
  -138
  -107
  -81
  -61
  -44
  -31
  -22
  -15
  -10
  -6
  -4
  -2
  -1
  -1
  0
  0
Current shareholders' claim on cash, %
  100
  65.7
  43.0
  28.0
  18.3
  11.9
  7.8
  5.1
  3.3
  2.2
  1.4
  1.0
  0.6
  0.4
  0.3
  0.2
  0.1
  0.1
  0.1
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

Nabors Industries Ltd., together with its subsidiaries, provides drilling and rig services. It offers equipment manufacturing, rig instrumentation, optimization software, and directional drilling services; and patented steering systems and rig instrumentation software systems, including ROCKIT directional drilling system that provides data collection services to oil and gas exploration and service companies, and RIGWATCH software, which monitors a rig’s real-time performance and daily reporting for drilling operations. The company also manufactures and sells top drives, catwalks, wrenches, draw works, and other drilling related equipment; and offers well-site services, such as engineering, transportation and disposal, construction, maintenance, well logging, directional drilling, data collection, and other support services. As of December 31, 2015, it marketed approximately 430 rigs for land-based drilling operations in the United States, Canada, and approximately 20 other countries worldwide; 42 rigs for offshore drilling operations in the United States and internationally; and 6 jackup units. The company was founded in 1968 and is headquartered in Hamilton, Bermuda.

FINANCIAL RATIOS  of  Nabors Industries (NBR)

Valuation Ratios
P/E Ratio -1.8
Price to Sales 0.8
Price to Book 0.6
Price to Tangible Book
Price to Cash Flow 3.5
Price to Free Cash Flow 13.8
Growth Rates
Sales Growth Rate -42.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -54.4%
Cap. Spend. - 3 Yr. Gr. Rate -19.6%
Financial Strength
Quick Ratio NaN
Current Ratio 0.3
LT Debt to Equity 110.2%
Total Debt to Equity 110.2%
Interest Coverage -6
Management Effectiveness
Return On Assets -9.9%
Ret/ On Assets - 3 Yr. Avg. -5.4%
Return On Total Capital -13.9%
Ret/ On T. Cap. - 3 Yr. Avg. -8.4%
Return On Equity -27.4%
Return On Equity - 3 Yr. Avg. -15.9%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 39.7%
Gross Margin - 3 Yr. Avg. 37.4%
EBITDA Margin -6.3%
EBITDA Margin - 3 Yr. Avg. 7.5%
Operating Margin -34.5%
Oper. Margin - 3 Yr. Avg. -15.1%
Pre-Tax Margin -53.7%
Pre-Tax Margin - 3 Yr. Avg. -24.6%
Net Profit Margin -46.2%
Net Profit Margin - 3 Yr. Avg. -21.9%
Effective Tax Rate 15.6%
Eff/ Tax Rate - 3 Yr. Avg. 9.4%
Payout Ratio -5%

NBR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the NBR stock intrinsic value calculation we used $2229 million for the last fiscal year's total revenue generated by Nabors Industries. The default revenue input number comes from 2016 income statement of Nabors Industries. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our NBR stock valuation model: a) initial revenue growth rate of 2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 8.4%, whose default value for NBR is calculated based on our internal credit rating of Nabors Industries, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Nabors Industries.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of NBR stock the variable cost ratio is equal to 63.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $1624 million in the base year in the intrinsic value calculation for NBR stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.1% for Nabors Industries.

Corporate tax rate of 27% is the nominal tax rate for Nabors Industries. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the NBR stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for NBR are equal to 297.6%.

Life of production assets of 10 years is the average useful life of capital assets used in Nabors Industries operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for NBR is equal to 1.7%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $3247 million for Nabors Industries - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 275.862 million for Nabors Industries is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Nabors Industries at the current share price and the inputted number of shares is $1.8 billion.

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COMPANY NEWS

▶ How Nabors Industries Is Valued Compared to Its Peers   [Aug-22-17 04:36PM  Market Realist]
▶ How Nabors Could Use Its Free Cash Flow This Year   [Aug-21-17 09:06AM  Market Realist]
▶ What Could Happen to Naborss Debt in 2017   [07:36AM  Market Realist]
▶ Behind Naborss and Tescos Value Drivers in 2Q17   [Aug-18-17 10:37AM  Market Realist]
▶ Inside Naborss Management Estimates for 2017   [07:38AM  Market Realist]
▶ Why Does Naborss Stock Price Look so Bearish?   [Aug-17-17 05:36PM  Market Realist]
▶ Why Nabors Plans to Acquire Tesco   [03:54PM  Market Realist]
▶ Inside Baker Hughess Growth Drivers in 2Q17   [07:37AM  Market Realist]
▶ WeissLaw LLP Investigates Tesco Corporation Acquisition   [Aug-15-17 02:31PM  PR Newswire]
▶ Nabors to acquire Houston oil field services co. in all-stock deal   [09:25AM  American City Business Journals]
▶ What Affected Flotek Industries in 2Q17?   [07:37AM  Market Realist]
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▶ What Are Nabors Industries Returns after 2Q17?   [Aug-03-17 02:35PM  Market Realist]
▶ CA Inc leading the CNBC IQ100   [01:15PM  CNBC Videos]
▶ Nabors reports 2Q loss   [Aug-02-17 11:13PM  Associated Press]
▶ Nabors Announces Second Quarter Results   [06:16PM  PR Newswire]
▶ Nabors Industries leading the iQ100   [Jul-25-17 12:36PM  CNBC Videos]
▶ These Could Be Nabors Industries Key Drivers in 2Q17   [Jul-21-17 10:40AM  Market Realist]
▶ What Analysts Expect from Nabors Industries 2Q17 Earnings   [Jul-20-17 05:32PM  Market Realist]
▶ What Analysts Expect from Weatherfords 2Q17 Earnings   [Jul-17-17 03:47PM  Market Realist]
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▶ iQ100 index up 20% for one year   [Jun-29-17 01:31PM  CNBC Videos]
▶ What Are the Implied Volatilities of the Top OFS Companies?   [Jun-28-17 10:36AM  Market Realist]
▶ Correlation between Weatherford and Crude Oil on June 23   [Jun-26-17 04:35PM  Market Realist]
▶ Last Weeks Crucial Energy Industry Updates   [10:21AM  Market Realist]
▶ iQ100 up over twenty percent   [Jun-23-17 02:57PM  CNBC Videos]
▶ How Nabors Industries Is Valued Compared to Its Peers   [Jun-21-17 02:35PM  Market Realist]
▶ Why Is Nabors Industries Stock Price Bearish?   [10:26AM  Market Realist]
▶ The top 25% in a year   [Jun-19-17 01:54PM  CNBC Videos]
▶ What Was Weatherfords Correlation with Crude Oil on June 7?   [Jun-12-17 10:36AM  Market Realist]
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Financial statements of NBR
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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