Intrinsic value of Nabors Industries - NBR

Previous Close

$6.37

  Intrinsic Value

$2.44

stock screener

  Rating & Target

str. sell

-62%

Previous close

$6.37

 
Intrinsic value

$2.44

 
Up/down potential

-62%

 
Rating

str. sell

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 2017), $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
   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
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  27.80
  25.52
  23.47
  21.62
  19.96
  18.46
  17.12
  15.91
  14.81
  13.83
  12.95
  12.15
  11.44
  10.80
  10.22
  9.69
  9.22
  8.80
  8.42
  8.08
  7.77
  7.49
  7.25
  7.02
  6.82
  6.64
  6.47
  6.33
  6.19
  6.07
Revenue, $m
  3,278
  4,115
  5,080
  6,179
  7,412
  8,780
  10,283
  11,919
  13,685
  15,578
  17,595
  19,733
  21,991
  24,365
  26,854
  29,457
  32,175
  35,007
  37,955
  41,022
  44,210
  47,524
  50,967
  54,545
  58,264
  62,131
  66,153
  70,338
  74,694
  79,231
Variable operating expenses, $m
  4,853
  6,087
  7,512
  9,132
  10,952
  12,971
  15,188
  17,601
  20,206
  22,998
  25,957
  29,112
  32,442
  35,944
  39,616
  43,457
  47,466
  51,644
  55,994
  60,518
  65,221
  70,109
  75,189
  80,468
  85,955
  91,659
  97,593
  103,766
  110,193
  116,886
Fixed operating expenses, $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
Total operating expenses, $m
  4,853
  6,087
  7,512
  9,132
  10,952
  12,971
  15,188
  17,601
  20,206
  22,998
  25,957
  29,112
  32,442
  35,944
  39,616
  43,457
  47,466
  51,644
  55,994
  60,518
  65,221
  70,109
  75,189
  80,468
  85,955
  91,659
  97,593
  103,766
  110,193
  116,886
Operating income, $m
  -1,575
  -1,973
  -2,432
  -2,954
  -3,540
  -4,190
  -4,904
  -5,682
  -6,521
  -7,421
  -8,362
  -9,378
  -10,451
  -11,580
  -12,762
  -14,000
  -15,291
  -16,637
  -18,038
  -19,496
  -21,011
  -22,586
  -24,222
  -25,923
  -27,690
  -29,528
  -31,440
  -33,428
  -35,499
  -37,655
EBITDA, $m
  -745
  -935
  -1,155
  -1,405
  -1,685
  -1,996
  -2,338
  -2,710
  -3,111
  -3,542
  -4,000
  -4,487
  -5,000
  -5,539
  -6,105
  -6,697
  -7,315
  -7,959
  -8,629
  -9,327
  -10,051
  -10,805
  -11,588
  -12,401
  -13,247
  -14,126
  -15,040
  -15,992
  -16,982
  -18,014
Interest expense (income), $m
  184
  238
  328
  433
  555
  694
  850
  1,023
  1,213
  1,419
  1,642
  1,881
  2,136
  2,406
  2,692
  2,991
  3,306
  3,635
  3,978
  4,336
  4,708
  5,096
  5,498
  5,917
  6,352
  6,804
  7,274
  7,762
  8,270
  8,799
  9,349
Earnings before tax, $m
  -1,813
  -2,301
  -2,865
  -3,509
  -4,234
  -5,040
  -5,927
  -6,894
  -7,940
  -9,063
  -10,244
  -11,515
  -12,858
  -14,271
  -15,754
  -17,306
  -18,926
  -20,615
  -22,374
  -24,204
  -26,107
  -28,084
  -30,139
  -32,275
  -34,494
  -36,802
  -39,202
  -41,698
  -44,297
  -47,004
Tax expense, $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
Net income, $m
  -1,813
  -2,301
  -2,865
  -3,509
  -4,234
  -5,040
  -5,927
  -6,894
  -7,940
  -9,063
  -10,244
  -11,515
  -12,858
  -14,271
  -15,754
  -17,306
  -18,926
  -20,615
  -22,374
  -24,204
  -26,107
  -28,084
  -30,139
  -32,275
  -34,494
  -36,802
  -39,202
  -41,698
  -44,297
  -47,004

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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
Total assets, $m
  10,748
  13,491
  16,657
  20,258
  24,301
  28,788
  33,716
  39,078
  44,867
  51,074
  57,688
  64,700
  72,101
  79,885
  88,046
  96,581
  105,491
  114,777
  124,443
  134,498
  144,951
  155,815
  167,104
  178,836
  191,030
  203,709
  216,895
  230,615
  244,898
  259,773
Adjusted assets (=assets-cash), $m
  10,748
  13,491
  16,657
  20,258
  24,301
  28,788
  33,716
  39,078
  44,867
  51,074
  57,688
  64,700
  72,101
  79,885
  88,046
  96,581
  105,491
  114,777
  124,443
  134,498
  144,951
  155,815
  167,104
  178,836
  191,030
  203,709
  216,895
  230,615
  244,898
  259,773
Revenue / Adjusted assets
  0.305
  0.305
  0.305
  0.305
  0.305
  0.305
  0.305
  0.305
  0.305
  0.305
  0.305
  0.305
  0.305
  0.305
  0.305
  0.305
  0.305
  0.305
  0.305
  0.305
  0.305
  0.305
  0.305
  0.305
  0.305
  0.305
  0.305
  0.305
  0.305
  0.305
Average production assets, $m
  8,126
  10,200
  12,594
  15,317
  18,374
  21,766
  25,492
  29,547
  33,924
  38,617
  43,618
  48,919
  54,515
  60,401
  66,571
  73,025
  79,761
  86,782
  94,091
  101,693
  109,597
  117,811
  126,347
  135,217
  144,437
  154,023
  163,993
  174,367
  185,166
  196,413
Working capital, $m
  -252
  -317
  -391
  -476
  -571
  -676
  -792
  -918
  -1,054
  -1,199
  -1,355
  -1,519
  -1,693
  -1,876
  -2,068
  -2,268
  -2,477
  -2,696
  -2,923
  -3,159
  -3,404
  -3,659
  -3,924
  -4,200
  -4,486
  -4,784
  -5,094
  -5,416
  -5,751
  -6,101
Total debt, $m
  5,556
  7,347
  9,415
  11,766
  14,407
  17,337
  20,554
  24,056
  27,836
  31,889
  36,208
  40,787
  45,620
  50,703
  56,032
  61,606
  67,423
  73,487
  79,799
  86,365
  93,191
  100,285
  107,657
  115,318
  123,281
  131,560
  140,170
  149,130
  158,456
  168,170
Total liabilities, $m
  7,018
  8,809
  10,877
  13,228
  15,869
  18,799
  22,016
  25,518
  29,298
  33,351
  37,670
  42,249
  47,082
  52,165
  57,494
  63,068
  68,885
  74,949
  81,261
  87,827
  94,653
  101,747
  109,119
  116,780
  124,743
  133,022
  141,632
  150,592
  159,918
  169,632
Total equity, $m
  3,729
  4,681
  5,780
  7,030
  8,433
  9,989
  11,699
  13,560
  15,569
  17,723
  20,018
  22,451
  25,019
  27,720
  30,552
  33,514
  36,605
  39,827
  43,182
  46,671
  50,298
  54,068
  57,985
  62,056
  66,288
  70,687
  75,263
  80,024
  84,980
  90,141
Total liabilities and equity, $m
  10,747
  13,490
  16,657
  20,258
  24,302
  28,788
  33,715
  39,078
  44,867
  51,074
  57,688
  64,700
  72,101
  79,885
  88,046
  96,582
  105,490
  114,776
  124,443
  134,498
  144,951
  155,815
  167,104
  178,836
  191,031
  203,709
  216,895
  230,616
  244,898
  259,773
Debt-to-equity ratio
  1.490
  1.570
  1.630
  1.670
  1.710
  1.740
  1.760
  1.770
  1.790
  1.800
  1.810
  1.820
  1.820
  1.830
  1.830
  1.840
  1.840
  1.850
  1.850
  1.850
  1.850
  1.850
  1.860
  1.860
  1.860
  1.860
  1.860
  1.860
  1.860
  1.870
Adjusted equity ratio
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -1,813
  -2,301
  -2,865
  -3,509
  -4,234
  -5,040
  -5,927
  -6,894
  -7,940
  -9,063
  -10,244
  -11,515
  -12,858
  -14,271
  -15,754
  -17,306
  -18,926
  -20,615
  -22,374
  -24,204
  -26,107
  -28,084
  -30,139
  -32,275
  -34,494
  -36,802
  -39,202
  -41,698
  -44,297
  -47,004
Depreciation, amort., depletion, $m
  830
  1,037
  1,277
  1,549
  1,855
  2,194
  2,567
  2,972
  3,410
  3,879
  4,362
  4,892
  5,452
  6,040
  6,657
  7,302
  7,976
  8,678
  9,409
  10,169
  10,960
  11,781
  12,635
  13,522
  14,444
  15,402
  16,399
  17,437
  18,517
  19,641
Funds from operations, $m
  -983
  -1,263
  -1,589
  -1,960
  -2,379
  -2,846
  -3,361
  -3,923
  -4,531
  -5,184
  -5,882
  -6,623
  -7,406
  -8,231
  -9,097
  -10,003
  -10,950
  -11,937
  -12,965
  -14,035
  -15,147
  -16,303
  -17,504
  -18,753
  -20,050
  -21,399
  -22,802
  -24,262
  -25,781
  -27,362
Change in working capital, $m
  -55
  -64
  -74
  -85
  -95
  -105
  -116
  -126
  -136
  -146
  -155
  -165
  -174
  -183
  -192
  -200
  -209
  -218
  -227
  -236
  -245
  -255
  -265
  -276
  -286
  -298
  -310
  -322
  -335
  -349
Cash from operations, $m
  -928
  -1,199
  -1,514
  -1,876
  -2,284
  -2,741
  -3,245
  -3,797
  -4,395
  -5,038
  -5,726
  -6,458
  -7,232
  -8,048
  -8,905
  -9,803
  -10,741
  -11,719
  -12,738
  -13,799
  -14,901
  -16,048
  -17,239
  -18,477
  -19,764
  -21,102
  -22,493
  -23,939
  -25,445
  -27,013
Maintenance CAPEX, $m
  -636
  -813
  -1,020
  -1,259
  -1,532
  -1,837
  -2,177
  -2,549
  -2,955
  -3,392
  -3,862
  -4,362
  -4,892
  -5,452
  -6,040
  -6,657
  -7,302
  -7,976
  -8,678
  -9,409
  -10,169
  -10,960
  -11,781
  -12,635
  -13,522
  -14,444
  -15,402
  -16,399
  -17,437
  -18,517
New CAPEX, $m
  -1,768
  -2,074
  -2,394
  -2,723
  -3,057
  -3,392
  -3,726
  -4,055
  -4,377
  -4,693
  -5,001
  -5,302
  -5,596
  -5,885
  -6,170
  -6,454
  -6,736
  -7,021
  -7,309
  -7,602
  -7,904
  -8,214
  -8,536
  -8,870
  -9,220
  -9,586
  -9,970
  -10,374
  -10,799
  -11,247
Cash from investing activities, $m
  -2,404
  -2,887
  -3,414
  -3,982
  -4,589
  -5,229
  -5,903
  -6,604
  -7,332
  -8,085
  -8,863
  -9,664
  -10,488
  -11,337
  -12,210
  -13,111
  -14,038
  -14,997
  -15,987
  -17,011
  -18,073
  -19,174
  -20,317
  -21,505
  -22,742
  -24,030
  -25,372
  -26,773
  -28,236
  -29,764
Free cash flow, $m
  -3,332
  -4,085
  -4,928
  -5,858
  -6,873
  -7,971
  -9,147
  -10,400
  -11,727
  -13,123
  -14,589
  -16,122
  -17,720
  -19,385
  -21,116
  -22,913
  -24,779
  -26,716
  -28,725
  -30,810
  -32,974
  -35,222
  -37,556
  -39,982
  -42,506
  -45,131
  -47,865
  -50,713
  -53,681
  -56,777
Issuance/(repayment) of debt, $m
  1,528
  1,791
  2,067
  2,352
  2,640
  2,930
  3,218
  3,502
  3,780
  4,053
  4,319
  4,579
  4,833
  5,083
  5,329
  5,574
  5,818
  6,064
  6,312
  6,566
  6,826
  7,094
  7,372
  7,661
  7,963
  8,279
  8,611
  8,959
  9,327
  9,713
Issuance/(repurchase) of shares, $m
  2,630
  3,252
  3,964
  4,759
  5,637
  6,597
  7,637
  8,755
  9,949
  11,217
  12,539
  13,948
  15,426
  16,972
  18,586
  20,267
  22,018
  23,837
  25,728
  27,693
  29,734
  31,854
  34,056
  36,346
  38,726
  41,201
  43,777
  46,459
  49,253
  52,165
Cash from financing (excl. dividends), $m  
  4,158
  5,043
  6,031
  7,111
  8,277
  9,527
  10,855
  12,257
  13,729
  15,270
  16,858
  18,527
  20,259
  22,055
  23,915
  25,841
  27,836
  29,901
  32,040
  34,259
  36,560
  38,948
  41,428
  44,007
  46,689
  49,480
  52,388
  55,418
  58,580
  61,878
Total cash flow (excl. dividends), $m
  827
  958
  1,103
  1,253
  1,404
  1,556
  1,707
  1,857
  2,003
  2,146
  2,269
  2,405
  2,539
  2,670
  2,799
  2,928
  3,056
  3,185
  3,316
  3,449
  3,585
  3,726
  3,872
  4,024
  4,183
  4,349
  4,523
  4,706
  4,899
  5,102
Retained Cash Flow (-), $m
  -2,630
  -3,252
  -3,964
  -4,759
  -5,637
  -6,597
  -7,637
  -8,755
  -9,949
  -11,217
  -12,539
  -13,948
  -15,426
  -16,972
  -18,586
  -20,267
  -22,018
  -23,837
  -25,728
  -27,693
  -29,734
  -31,854
  -34,056
  -36,346
  -38,726
  -41,201
  -43,777
  -46,459
  -49,253
  -52,165
Prev. year cash balance distribution, $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 flow adjustment, $m
  31
  39
  49
  61
  74
  89
  105
  123
  143
  164
  187
  211
  237
  264
  292
  322
  353
  386
  420
  455
  492
  531
  570
  612
  655
  699
  746
  794
  844
  896
Cash available for distribution, $m
  -1,803
  -2,294
  -2,861
  -3,506
  -4,233
  -5,041
  -5,930
  -6,899
  -7,946
  -9,071
  -10,270
  -11,543
  -12,887
  -14,302
  -15,787
  -17,340
  -18,962
  -20,652
  -22,413
  -24,244
  -26,148
  -28,128
  -30,184
  -32,322
  -34,543
  -36,852
  -39,254
  -41,753
  -44,354
  -47,063
Discount rate, %
  9.50
  9.98
  10.47
  11.00
  11.55
  12.12
  12.73
  13.37
  14.04
  14.74
  15.47
  16.25
  17.06
  17.91
  18.81
  19.75
  20.74
  21.77
  22.86
  24.01
  25.21
  26.47
  27.79
  29.18
  30.64
  32.17
  33.78
  35.47
  37.24
  39.10
PV of cash for distribution, $m
  -1,647
  -1,897
  -2,122
  -2,310
  -2,451
  -2,537
  -2,563
  -2,528
  -2,437
  -2,294
  -2,110
  -1,895
  -1,663
  -1,424
  -1,190
  -970
  -770
  -596
  -448
  -328
  -233
  -161
  -107
  -69
  -43
  -26
  -15
  -8
  -5
  -2
Current shareholders' claim on cash, %
  43.7
  19.4
  8.8
  4.0
  1.9
  0.9
  0.4
  0.2
  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
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

Nabors Industries Ltd. owns and operates a land-based drilling rig fleet. The Company is a provider of offshore platform drilling rigs in the United States and multiple international markets. The Company conducts its Drilling & Rig Services business through four segments: U.S. Drilling, Canada Drilling, International Drilling and Rig Services. The Company provides wellbore placement services, drilling software and performance tools, drilling equipment and various technologies throughout the oil and gas markets. The Company's Drilling & Rig Services business comprises land-based and offshore drilling rig operations and other rig services, consisting of equipment manufacturing, rig instrumentation and optimization software. The Company is a provider of directional drilling and measurement while drilling (MWD) systems and services. The Company also provides drilling technology and equipment, and well-site services.

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 3.4
Price to Free Cash Flow 13.2
Growth Rates
Sales Growth Rate -42.3%
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 -34.6%
Oper. Margin - 3 Yr. Avg. -15.2%
Pre-Tax Margin -53.8%
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 $2565 million for the last fiscal year's total revenue generated by Nabors Industries. The default revenue input number comes from 2017 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 27.8% 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 9.5%, 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 148.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 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 5.9% 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 1.2%.

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 247.9%.

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 -7.7%. 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 - $2912 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 281 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

▶ Nabors: 2Q Earnings Snapshot   [Jul-31-18 05:55PM  Associated Press]
▶ Nabors Announces Second Quarter Results   [05:37PM  PR Newswire]
▶ NOV, Saudi Aramco form JV to provide drilling equipment, create education center   [Jun-29-18 01:19PM  American City Business Journals]
▶ Nabors Industries Stock Is Poised to Break Out   [May-22-18 10:17AM  TheStreet.com]
▶ Nabors: 1Q Earnings Snapshot   [May-01-18 07:42PM  Associated Press]
▶ Nabors Announces First Quarter Results   [07:27PM  PR Newswire]
▶ At $6.53, Is It Time To Buy Nabors Industries Ltd (NYSE:NBR)?   [Apr-03-18 04:07PM  Simply Wall St.]
▶ Analysts Expect Breakeven For Nabors Industries Ltd (NYSE:NBR)   [Mar-26-18 05:38PM  Simply Wall St.]
▶ Is Nabors Industries Ltd (NYSE:NBR) A Good Dividend Stock?   [Mar-16-18 03:58PM  Simply Wall St.]
▶ Nabors Industries Ltd. to Host Earnings Call   [Feb-28-18 08:40AM  ACCESSWIRE]
▶ Nabors reports 4Q loss   [Feb-27-18 07:33PM  Associated Press]
▶ Schlumbergers Earnings: Returns and Growth Estimates   [Jan-22-18 09:20AM  Market Realist]
▶ Analyzing Weatherford Internationals Growth Drivers in 3Q17   [Jan-19-18 07:35AM  Market Realist]
▶ The Labor Shortage In The Shale Boom   [Jan-15-18 05:00PM  Oilprice.com]
▶ Analyzing Halliburtons Revenue and Earnings in 3Q17   [Jan-10-18 02:00PM  Market Realist]
▶ The 3rd-Lowest Oilfield Services FCF Earner in 3Q17   [Dec-28-17 12:43PM  Market Realist]
▶ The Third-Highest Oilfield Services Free Cash Earner in 3Q17   [Dec-27-17 04:05PM  Market Realist]
▶ Nabors Industries atop the leaders again   [Dec-26-17 02:46PM  CNBC Videos]
▶ Teva Pharma falls to laggard   [Dec-19-17 02:37PM  CNBC Videos]
▶ Nabors Completes Acquisition of Tesco Corporation   [Dec-15-17 09:14AM  PR Newswire]
▶ Johnson Controls up over 2% among leaders   [Nov-28-17 01:36PM  CNBC Videos]
▶ Wall Street Targets for the Worst-Performing Oilfield Stocks   [Nov-27-17 10:32AM  Market Realist]
▶ The 5 Worst Oilfield Companies by Market Returns   [Nov-24-17 04:16PM  Market Realist]
▶ H.P. among the IQ100 laggards   [Nov-22-17 02:54PM  CNBC Videos]
▶ What We Can Forecast for Nabors Industries   [Nov-21-17 10:32AM  Market Realist]
▶ Gauging Short Interest in Nabors Industries   [09:03AM  Market Realist]
▶ What Nabors Industries Historical Valuation Suggests   [Nov-20-17 05:50PM  Market Realist]
▶ Nabors Industries Dividend Yield   [10:32AM  Market Realist]
▶ Nabors Industries Value Drivers in 3Q17   [07:33AM  Market Realist]
▶ Upstream Operators Capex and Nabors Industries Margin   [Nov-17-17 04:50PM  Market Realist]
▶ Why Nabors Industries Stock Price Is Bearish   [01:47PM  Market Realist]
▶ Are Nabors Industries Ltds (NBR) Interest Costs Too High?   [Nov-16-17 11:07AM  Simply Wall St.]
▶ General Electric among today's IQ100 laggards   [Nov-14-17 04:21PM  CNBC Videos]
▶ Nabors and TESCO Announce Transaction Status Update   [Nov-06-17 06:27PM  PR Newswire]
▶ IQ100 beating the market, up 28%   [Nov-03-17 01:19PM  CNBC Videos]
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