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Weatherford International (WFRD)
NASDAQ:WFRD
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Weatherford International
(NASDAQ:WFRD)72Outperform
Positive Factors
Shareholder Returns
Shareholder distributions are expected to exceed $200mn or 41% of FCF, driven by an expected increase in share repurchase activity.
Valuation
The stock is trading 50% below its long-term average EV/EBITDA multiple despite delivering higher margins and FCF than any time in the company’s history.
Negative Factors
Investment Decline
WFRD bears relatively greater exposure to two areas of declining investment, namely Mexico and the oil side of activity in Saudi.
Revenue Decline
In 2025, Latin America revenues are expected to decline by ~20% as PEMEX resets its operating budget.
Weatherford International (WFRD) vs. S&P 500 (SPY)
Market Cap
$3.95B
Dividend Yield1.38%
Average Volume (3M)1.39M
Price to Earnings (P/E)8.0
Beta (1Y)1.61
Revenue Growth7.36%
EPS Growth19.68%
CountryUS
Employees19,000
SectorEnergy
Sector Strength57
IndustryFossil Fuels
Share Statistics
EPS (TTM)6.75
Shares Outstanding72,846,375
10 Day Avg. Volume1,159,637
30 Day Avg. Volume1,393,501
Financial Highlights & Ratios
PEG Ratio0.41
Price to Book (P/B)N/A
Price to Sales (P/S)0.71
Price to Cash Flow (P/CF)3.80
P/FCF Ratio5.40
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$97.71Price Target Upside74.14% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering7
Weatherford International Business Overview & Revenue Model
Company DescriptionWeatherford International (WFRD) is a leading global provider of innovative solutions for the energy industry, specializing in oilfield services and equipment. The company operates across multiple sectors, including drilling services, evaluation and completion, and production. Weatherford's core products and services include well construction, production optimization, and reservoir evaluation technologies, aimed at enhancing operational efficiency and productivity for its clients in the oil and gas sector.
How the Company Makes MoneyWeatherford International generates revenue through a diversified portfolio of products and services tailored to the needs of the oil and gas industry. The company earns money by providing drilling services, well construction, and completion solutions, which are critical for the exploration and development of oil and gas reserves. Additionally, Weatherford offers production optimization technologies and reservoir evaluation services, which help clients maximize the output and efficiency of their existing assets. Key revenue streams include service contracts, equipment sales, and maintenance agreements. Strategic partnerships and long-term contracts with major oil and gas companies also play a significant role in driving the company's earnings.
Weatherford International Financial Statement Overview
Summary
Weatherford International demonstrates strong financial health with robust profitability and operational efficiency. However, leverage remains a concern, and the company should focus on improving cash flow growth.Income Statement
Weatherford International shows strong income statement performance, with a Gross Profit Margin of 50.42% and a Net Profit Margin of 9.18% in TTM (Trailing-Twelve-Months). Revenue Growth Rate is impressive at 7.37% from the previous year. Consistent improvements in EBIT and EBITDA margins to 17.16% and 16.98% respectively indicate robust operational efficiency.85
Very Positive
Balance Sheet
The company has a moderate Debt-to-Equity Ratio of 1.26, showing a balanced approach to leveraging. Return on Equity (ROE) is strong at 39.43%, indicating efficient use of equity. However, the Equity Ratio is relatively low at 28.88%, suggesting potential vulnerability to liabilities.70
Positive
Cash Flow
Cash flow performance is solid with a Free Cash Flow Growth Rate of -4.82% which needs attention, but the Operating Cash Flow to Net Income Ratio is robust at 1.56, showing good cash generation relative to profits. The Free Cash Flow to Net Income Ratio is 1.17, reflecting healthy liquidity.78
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 5.51B | 5.13B | 4.33B | 3.65B | 3.69B | Gross Profit |
| 1.91B | 1.74B | 1.31B | 929.00M | 878.00M | EBIT |
| 938.00M | 820.00M | 317.00M | -83.00M | -1.55B | EBITDA |
| 1.18B | 1.01B | 761.00M | 357.00M | -1.04B | Net Income Common Stockholders |
| 506.00M | 417.00M | 51.00M | -429.00M | -1.90B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 916.00M | 958.00M | 910.00M | 951.00M | 1.12B | Total Assets |
| 5.16B | 5.07B | 4.72B | 4.77B | 5.43B | Total Debt |
| 1.73B | 2.06B | 2.41B | 2.62B | 2.86B | Net Debt |
| 811.00M | 1.10B | 1.50B | 1.66B | 1.74B | Total Liabilities |
| 3.88B | 4.15B | 4.17B | 4.28B | 4.50B | Stockholders Equity |
| 1.28B | 924.00M | 551.00M | 496.00M | 937.00M |
| Cash Flow | Free Cash Flow | |||
| 792.00M | 623.00M | 217.00M | 237.00M | 56.00M | Operating Cash Flow |
| 792.00M | 832.00M | 349.00M | 322.00M | 210.00M | Investing Cash Flow |
| -293.00M | -289.00M | -54.00M | -83.00M | -75.00M | Financing Cash Flow |
| -511.00M | -514.00M | -248.00M | -403.00M | 348.00M |
Weatherford International Technical Analysis
Negative
56.11
Price Trends
67.06
Negative
74.44
Negative
91.26
Negative
Market Momentum
-3.64
Positive
32.05
Neutral
19.61
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WFRD, the sentiment is Negative. The current price of 56.11 is below the 20-day moving average (MA) of 64.13, below the 50-day MA of 67.06, and below the 200-day MA of 91.26, indicating a bearish trend. The MACD of -3.64 indicates Positive momentum. The RSI at 32.05 is Neutral, neither overbought nor oversold. The STOCH value of 19.61 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for WFRD.
Weatherford International Peers Comparison
Overall Rating
UnderperformOutperform
Sector (57)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $41.49B | 14.08 | 18.47% | 2.05% | 9.10% | 55.56% | |
78 Outperform | $53.62B | 12.69 | 21.59% | 2.79% | 9.58% | 6.53% | |
77 Outperform | $11.07B | 13.75 | 27.06% | 0.76% | 16.23% | 1403.29% | |
76 Outperform | $5.46B | 8.95 | 10.12% | 1.84% | 3.42% | -35.98% | |
75 Outperform | $21.22B | 8.63 | 25.14% | 2.78% | -0.32% | -3.41% | |
72 Outperform | $3.95B | 8.03 | 45.81% | 1.38% | 7.36% | 19.68% | |
57 Neutral | $8.34B | 5.35 | -5.98% | 7.29% | 0.20% | -69.45% |
* Energy Sector Average
Performance Comparison
WFRD
Weatherford International
56.11
-54.50
-49.27%
BKR
Baker Hughes Company
42.89
12.31
40.26%
FTI
TechnipFMC
26.67
4.56
20.62%
HAL
Halliburton
25.00
-10.82
-30.21%
NOV
NOV
14.96
-2.68
-15.19%
SLB
Schlumberger
41.37
-8.83
-17.59%
Weatherford International Earnings Call Summary
Earnings Call Date: Feb 5, 2025 | % Change Since: -13.70% | Next Earnings Date: Apr 29, 2025
Earnings Call Sentiment Neutral
The earnings call reflects a mixed sentiment with Weatherford achieving strong full-year EBITDA margins and significant free cash flow generation, while facing revenue declines in key regions like Mexico and Russia and projecting a challenging market outlook for 2025.Highlights
Strong Full-Year Adjusted EBITDA Margins
Weatherford achieved adjusted EBITDA margins exceeding 25% for the full year 2024, marking the highest full-year margin in over 15 years.
Significant Free Cash Flow Generation
The company generated $524 million in adjusted free cash flow for 2024, with a 37.9% free cash flow conversion rate.
Middle East, North Africa, and Asia Growth
The international business grew 10% for the full year, with the Middle East, North Africa, and Asia region showing a 17% year-on-year top-line growth.
Successful Dividend and Share Repurchase Program
Weatherford paid two quarterly dividends of $0.25 per share and repurchased approximately $99 million of shares during the second half of 2024.
Wealth Services Product Line Growth
Weatherford's Wealth Services product line grew over 50% in three years, demonstrating significant growth potential.
Lowlights
Revenue Decline in Key Regions
North America revenue was down 2% sequentially, and international business was down 6% sequentially and 3% year-over-year, primarily due to reduced activity in Latin America, especially Mexico.
Projected 2025 Revenue Decline
Weatherford expects total international revenues to decline mid-single digits in 2025, primarily due to anticipated drops in activity in Mexico and Russia.
Challenges in Mexico and Russia
The company faces significant declines in activity in Mexico, with anticipated revenue drops of 30% to 50%, and continued reduction in Russia due to geopolitical factors and currency challenges.
Uncertain Market Outlook
Despite some positive regional performance, the overall market outlook for 2025 has a negative bias in the immediate term, with significant headwinds in Mexico and Russia.
Company Guidance
During Weatherford International's fourth quarter and full-year 2024 earnings call, a comprehensive set of metrics and guidance was provided. The company reported a full-year adjusted EBITDA margin of 25.1%, marking the highest in over 15 years, despite a challenging fourth quarter with a 24.3% adjusted EBITDA margin. Weatherford achieved $524 million in adjusted free cash flow, yielding a 37.9% free cash flow conversion rate, with an aim to reach 50% in the long term. Revenue in North America decreased by 2% sequentially, while international revenue was down 6% sequentially and 3% year-over-year, primarily due to lower activity in Latin America, especially in Mexico. However, the company saw growth in the Middle East, North Africa, and Asia, with a 17% year-on-year increase in these regions. For 2025, Weatherford anticipates total international revenues to decline mid-single digits, mainly due to expected significant activity reductions in Mexico and Russia. Nevertheless, excluding these two countries, international revenues are projected to increase by low single digits. The company also highlighted its successful product lines, including a 50% growth in their Wealth Services business over three years. Looking forward, Weatherford expects 2025 revenues to range between $5.1 billion to $5.35 billion, with adjusted EBITDA projected between $1.2 billion and $1.35 billion.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.