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Nabors Industries Ltd. (NBR)
NYSE:NBR
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Nabors Industries
(NYSE:NBR)
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Rating:64Neutral
Price Target:
$85.00
▲(7.90% Upside)
Action:ReiteratedDate:02/14/26
The score is driven primarily by improving financial performance (profitability rebound and materially better leverage) and a supportive earnings-call outlook focused on deleveraging and synergy gains. These positives are tempered by weaker recent free-cash-flow conversion, higher 2026 capex and SANAD cash consumption, and only neutral technical momentum despite longer-term trend support; valuation is a notable positive due to the very low P/E.
Positive Factors
Deleveraging and capital structure improvement
Meaningful net-debt reduction and a longer weighted average maturity materially lower interest burden and refinancing risk. This improves financial flexibility, supports continued investment in growth (SANAD/Parker integration) and makes the company more resilient across oil-cycle downturns.
Return to robust operating profitability
A sustained return to positive net income and high EBITDA margins points to operating leverage and pricing power on active rigs. Durable margin expansion improves cash generation potential at cycle peaks and supports reinvestment, deleveraging and funding of higher-priority projects.
International SANAD new-build growth
A multi-year new-build program with predictable incremental EBITDA per rig tranche creates a durable growth engine and international diversification. Expanding high-spec fleet internationally supports longer-term contract revenue and reduces reliance on volatile U.S. Lower 48 cycles.
Negative Factors
Weak free cash flow conversion
Negative free cash flow despite profitable 2025 shows cash conversion remains fragile. Elevated working capital, capex and timing effects reduce financial flexibility, constrain rapid deleveraging and increase reliance on external funding during cyclical slowdowns.
High SANAD cash and capex demands
Large, near-term SANAD cash consumption and elevated new-build capex materially pressure consolidated free cash flow and could slow debt paydown or require incremental financing. Prolonged cash drag raises execution risk if market activity softens.
International operational disruptions and margin pressure
Operational disruptions and start-up inefficiencies can persist and erode international margins, undermining the SANAD growth payoff. Recurring regional issues or maintenance timing shifts amplify earnings volatility and weaken the durability of recent margin improvements.
Nabors Industries (NBR) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.16B
Dividend YieldN/A
Average Volume (3M)409.26K
Price to Earnings (P/E)2.9
Beta (1Y)1.40
Revenue Growth6.52%
EPS GrowthN/A
CountryUS
Employees12,400
SectorEnergy
Sector Strength52
IndustryOil & Gas Drilling
Share Statistics
EPS (TTM)0.17
Shares Outstanding14,673,186
10 Day Avg. Volume362,170
30 Day Avg. Volume409,263
Financial Highlights & Ratios
PEG Ratio-0.02
Price to Book (P/B)1.21
Price to Sales (P/S)0.22
P/FCF Ratio-31.58
Enterprise Value/Market Cap2.40
Enterprise Value/Revenue0.87
Enterprise Value/Gross Profit2.92
Enterprise Value/Ebitda2.12
Forecast
1Y Price Target
$76.17Price Target Upside-3.31% Downside
Rating ConsensusHold
Number of Analyst Covering6
EPS Forecast (FY)-6.55
Revenue Forecast (FY)$3.25B
Nabors Industries Business Overview & Revenue Model
Company DescriptionNabors Industries Ltd. provides drilling and drilling-related services for land-based and offshore oil and natural gas wells. The company operates through five segments: U.S. Drilling, Canada Drilling, International Drilling, Drilling Solutions, and Rig Technologies. It provides tubular running, wellbore placement, directional drilling, measurement-while-drilling (MWD), equipment manufacturing, and rig instrumentation services; and logging-while-drilling systems and services, as well as drilling optimization software. The company also offers REVit, an automated real time stick-slip mitigation system; ROCKit, a directional steering control system; SmartNAV, a collaborative guidance and advisory platform; SmartSLIDE, an advanced directional steering control system; and RigCLOUD, which provides the tools and infrastructure to integrate applications to deliver real-time insight into operations across the rig fleet. In addition, it manufactures and sells top drives, catwalks, wrenches, drawworks, and other drilling related equipment, such as robotic systems and downhole tools; and provides aftermarket sales and services for the installed base of its equipment. As of December 31, 2021, the company marketed approximately 301 rigs for land-based drilling operations in the United States, Canada, and in 20 other countries worldwide; and 29 rigs for offshore platform drilling operations in the United States and internationally. Nabors Industries Ltd. was founded in 1952 and is based in Hamilton, Bermuda.
How the Company Makes MoneyNabors makes money primarily by contracting its drilling rigs and related personnel to E&P companies to drill and complete oil and natural gas wells. Revenue is typically generated under customer contracts that pay a negotiated rate for rig time and associated services (with contract structure varying by market and customer, e.g., time-based dayrate arrangements and other contract forms that tie payment to provision of the rig and crew, and sometimes performance-related terms). In addition to rig-based contract revenue, Nabors earns revenue from drilling technology and services that support or enhance drilling operations—such as automation, digital drilling solutions, and other rig/operations-related tools—sold directly to customers and/or bundled with drilling contracts. Key factors influencing earnings include utilization of the rig fleet (how many rigs are working), achieved pricing (dayrates/contract rates), operating costs (labor, fuel, repairs and maintenance), and customer activity levels driven by commodity prices and E&P capital spending. Information on specific significant partnerships is null.
Nabors Industries Earnings Call Summary
Earnings Call Date:Feb 11, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 29, 2026
Earnings Call Sentiment Positive
Overall, the call conveyed a predominantly positive operational and financial trajectory: substantial debt reduction, improved credit profile, robust integration synergies from Parker, strong international rig additions (SANAD), and free cash flow outperformance in 2025. These positives outweigh the near-term headwinds — notably SANAD cash consumption, commodity price uncertainty, some regional operational disruptions (Colombia, Venezuela), and sequential revenue/EBITDA impacts from the Quail divestiture. Management maintained cautious guidance for H2 2026 but provided concrete plans to continue delevering and grow EBITDA normalized for Quail.Q4-2025 Updates
Positive Updates
Material Net Debt Reduction and Capital Structure Improvement
Reduced net debt by $554 million vs. end of 2024, improved net leverage to ~1.7x (lowest since 2008), extended weighted average debt maturity to 5.3 years (from 3.7) and executed debt refinancings (issued $700M notes, redeemed near-term maturities), lowering annualized cash interest expense by ~ $45 million.
Full-Year Revenue and Adjusted EBITDA Growth
Full year 2025 revenue of $3.2 billion, up 8.7% year-over-year (driven by Parker acquisition and international expansion). Full year adjusted EBITDA was $913 million, up $31 million vs. prior year.
Fourth Quarter Adjusted EBITDA Beat
Q4 adjusted EBITDA of $222 million (EBITDA margin 27.8%) exceeded guidance and prior expectations despite divestiture impacts; Q4 EBITDA outperformed the outlook provided on the prior call.
Strong Free Cash Flow Outperformance and Working Capital Progress
Generated Q4 adjusted free cash flow of $132 million and full-year adjusted free cash flow of ~$117 million, materially above the revised post‑Parker guidance of ~$80 million. Sequential working capital improvement of ~ $40 million driven by higher collections in Mexico and one-time claim settlements.
Parker Wellbore Integration Delivering Synergies
Realized synergies at an annualized run rate of $63 million (above $60M target) and achieved 2025 EBITDA target for retained Parker operations (~$55 million). Company projects retained Parker businesses will contribute at least $70 million in adjusted EBITDA in 2026.
International Drilling Momentum and SANAD New-Build Expansion
International Drilling revenue grew sequentially to $424 million (up 4.1% Q/Q) with average rig count up ~4 rigs to 93.3. SANAD deployed its 14th new-build in Q4, expects five more in 2026 (total ~19) and continuation of the multi‑year new-build program (targeting incremental annualized EBITDA >$60M per five‑rig tranche).
U.S. Lower 48 Operational Improvements and New Rig Tech Adoption
Lower 48 rig count accelerated to a Q4 high of 62 and recent count to 66; average daily margin in Lower 48 increased modestly (~1.2% to $13,303). High-spec PACE-X Ultra rig performing well (first unit in service since mid‑September) with interest to deploy additional upgraded rigs.
Nabors Drilling Solutions (NDS) Outperformance and Third-Party Growth
NDS penetration on third-party rigs improved: revenue on third‑party rigs (excluding Quail) increased sequentially by 10% while the third-party rig count rose only 1%; NDS EBITDA (normalized for Quail) grew ~2.3% Q/Q and margin improved.
Negative Updates
Sequential Revenue and EBITDA Headwind from Quail Divestiture
Consolidated Q4 revenue decreased $21 million sequentially (‑2.6% Q/Q); part of the decline reflects the divestiture of Quail (Q3 contribution: $34M revenue and $20M EBITDA), and absolute EBITDA fell $15 million (‑6.2% Q/Q) versus Q3.
International Daily Rig Margin Shortfall and Operational Disruptions
International drilling average daily rig margin fell to $17,130, down $301 sequentially and below the lower bound of guidance due to activity disruptions in Colombia, increased maintenance days in Saudi Arabia, and inefficiencies from rig start-ups; International EBITDA margin down ~35 bps Q/Q.
Commodity Price Pressure and Macro Uncertainty
2025 experienced a downward trend in oil prices with global supply exceeding demand (EIA surplus each month), creating uncertainty from factors like tariff discussions, production increases, Tengiz interruption, and geopolitical risks (Iran, Ukraine) which could pressure future activity.
SANAD Cash Consumption and Near-Term Free Cash Flow Headwind
SANAD consumed ~ $55 million of adjusted free cash flow in 2025; expected SANAD consumption of $100M–$120M for full-year 2026 and ~$50M–$60M in Q1 2026. Company expects consolidated adjusted free cash flow to be negative $80M–$90M in Q1 2026 (seasonal interest, bonuses, taxes), meaning near-term free cash flow is pressured by SANAD buildout.
CapEx Increase and Timing Shift for SANAD New-Builds
Total 2025 CapEx was $695 million; 2026 CapEx guidance increased to $737M–$760M including $360M–$380M for SANAD new-builds. Approximately $85M of SANAD spend shifted from 2025 into 2026, raising near-term capital intensity and cash consumption.
Regional Operational Challenges — Venezuela, Colombia, Alaska/Offshore
Venezuela operations remain idle with five rigs stacked and return contingent on commercial/security terms. Colombia experienced activity/logistics disruptions impacting margins. Alaska and U.S. offshore revenue decreased 7.9% sequentially in Q4 driven by scope/mix changes.
Margin Compression and Guidance Caution for Second Half
Consolidated EBITDA margin down 110 basis points Q/Q to 27.8%. Management expressed a cautious stance for H2 2026 given commodity volatility and market uncertainty, signaling potential downside risk if macro conditions worsen.
Company Guidance
The company guided to a steady but cautious 2026 outlook: for Q1 it expects U.S. Drilling average rigs of 64–65 (Lower 48 daily adjusted gross margin ~ $13,200), Alaska & U.S. Offshore EBITDA $16–17M, International Drilling average rigs 91–92 (daily gross margin $17,500–$17,600), Drilling Solutions EBITDA ~ $39M and Rig Technologies EBITDA ~ $2M, with consolidated adjusted free cash flow expected to consume $80–90M in Q1 (SANAD consuming ~$50–60M). For full‑year 2026 the company targets Lower 48 average rigs 61–64 with daily gross margin $13,200–$13,400, International Drilling 96–98 rigs (Dec exit ≥101) with average daily gross margin ~$18,500 (≈+5%), Drilling Solutions EBITDA $160–170M (6–7% normalized growth), Rig Technologies EBITDA $22–25M, capex $737–760M (SANAD new‑builds $360–380M), SANAD free cash flow consumption $100–120M (rest of business generating $80–90M), aims to grow EBITDA 6–8% normalized for Quail while essentially matching 2025 EBITDA, expects retained Parker businesses to contribute at least $70M EBITDA in 2026 (synergies run‑rate ~$63M), and plans to reduce gross debt by at least $100M during the year.Nabors Industries Financial Statement Overview
Summary
Fundamentals are improving, led by a return to solid profitability in 2025 and a sharply better leverage profile versus 2023–2024. The main offset is weaker cash-flow quality: free cash flow turned slightly negative in 2025 despite positive earnings, reducing financial flexibility in a cyclical business.Income Statement
Profitability has improved meaningfully, with 2025 returning to solid profitability (net profit margin ~7.8%) after multiple loss years, and operating profitability remaining healthy (EBITDA margin ~28.7%). Revenue growth rebounded strongly in 2025 (+217%), though results have been volatile across the cycle (declines in 2020–2021 and again in 2024). Gross margin is well below the 2022–2023 peak, suggesting less favorable pricing/mix or higher costs despite the earnings recovery.66
Positive
Balance Sheet
Leverage looks much more manageable in 2025 (debt-to-equity ~0.64) compared with very high leverage in 2023–2024 (debt-to-equity ~9.6x to ~18.8x), indicating a sharp improvement in the capital structure. Equity remains relatively modest versus the asset base, and the historical period shows meaningful balance-sheet risk during downturns. Returns improved sharply in 2025 (return on equity ~42%), but that follows several years of negative returns, highlighting cyclical and execution risk.58
Neutral
Cash Flow
Operating cash flow has been consistently positive and increased in 2025, but cash conversion weakened: free cash flow turned slightly negative in 2025 and fell materially versus the prior year (free cash flow growth ~-86%). Free cash flow also did not cover net income in 2025 (negative free cash flow versus positive earnings), suggesting higher capital spending or working-capital drag. Overall, cash generation is positive at the operating level, but the recent drop in free cash flow reduces flexibility.52
Neutral
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 3.18B | 2.93B | 3.01B | 2.65B | 2.02B |
| Gross Profit | 621.08M | 554.31M | 1.22B | 987.76M | 730.23M |
| EBITDA | 912.67M | 813.23M | 915.15M | 709.39M | 481.52M |
| Net Income | 248.34M | -176.08M | -11.78M | -350.26M | -569.27M |
Balance Sheet | |||||
| Total Assets | 4.79B | 4.50B | 5.28B | 4.73B | 5.53B |
| Cash, Cash Equivalents and Short-Term Investments | 940.74M | 397.30M | 1.07B | 452.31M | 991.49M |
| Total Debt | 2.57B | 2.53B | 3.20B | 2.57B | 3.31B |
| Total Liabilities | 3.35B | 3.30B | 4.00B | 3.51B | 4.13B |
| Stockholders Equity | 590.73M | 135.00M | 326.61M | 368.96M | 590.66M |
Cash Flow | |||||
| Free Cash Flow | -22.68M | 13.51M | 97.01M | 127.64M | 194.74M |
| Operating Cash Flow | 693.27M | 581.43M | 637.86M | 501.09M | 428.78M |
| Investing Cash Flow | 97.09M | -555.46M | -570.42M | -368.71M | -117.22M |
| Financing Cash Flow | -566.79M | -662.05M | 592.59M | -661.53M | 488.42M |
Nabors Industries Technical Analysis
Positive
78.78
Price Trends
70.84
Positive
61.16
Positive
48.37
Positive
Market Momentum
2.24
Positive
57.85
Neutral
48.44
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NBR, the sentiment is Positive. The current price of 78.78 is above the 20-day moving average (MA) of 78.07, above the 50-day MA of 70.84, and above the 200-day MA of 48.37, indicating a bullish trend. The MACD of 2.24 indicates Positive momentum. The RSI at 57.85 is Neutral, neither overbought nor oversold. The STOCH value of 48.44 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for NBR.
Nabors Industries Peers Comparison
UnderperformOutperform
Sector (65)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
67 Neutral | $1.49B | 23.49 | 4.41% | 5.99% | 5.83% | -11.86% | |
65 Neutral | $15.17B | 7.61 | 4.09% | 5.20% | 3.87% | -62.32% | |
65 Neutral | $4.08B | -25.02 | -2.83% | 5.42% | -16.59% | 83.95% | |
65 Neutral | $6.89B | -1.36 | -32.62% | ― | 16.93% | -335.82% | |
64 Neutral | $1.16B | 2.88 | 57.72% | ― | 6.52% | ― | |
58 Neutral | $3.61B | -7.33 | -11.45% | 3.24% | 35.89% | -148.39% | |
56 Neutral | $2.75B | -54.06 | -2.68% | ― | -9.31% | -91.57% |
* Energy Sector Average
NBR
Nabors Industries
78.78
34.80
79.13%
HP
Helmerich & Payne
36.17
11.80
48.44%
PTEN
Patterson-UTI
10.74
2.76
34.50%
RIG
Transocean
6.25
3.10
98.41%
BORR
Borr Drilling
4.87
2.45
101.24%
SDRL
Seadrill Limited
44.18
19.15
76.51%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.