Why Nabors Industries Shares Jumped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Drilling contractor Nabors Industries (NYSE: NBR  ) saw its shares shoot 10% higher today after the company released earnings.

So what: Revenue jumped from $1.4 billion a year ago to $1.84 billion and topped analyst estimates. Earnings per share fell a penny short of estimates at $0.49, but investors were apparently willing to overlook that today.

Now what: The market has been worried about a decline in the pressure pumping business because of a reduction in natural gas fracking, but Nabors appears to be weathering the storm. Management said that existing contracts would give the pumping unit a "respectable" year and high oil prices would keep demand high for the company's other products. Trading for under $17 and a forward P/E ratio of 6.5, the shares look attractive right now, and I think this is a great time to buy.

Interested in more info on Nabors Industries? Add it to your Watchlist.

Fool contributor Travis Hoium has no position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings, or follow his CAPS picks at TMFFlushDraw.

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  • Report this Comment On July 03, 2012, at 9:17 PM, cajun1958 wrote:

    Will tkis be the same story when NBR releases Q2 earnings...probably....given the 4% jump on 7/2 based on crude price rise. The massive reduction in land rigs looking for gas has already been factored into the stock's price and natural gas prices should finally rise on utility demand if weather stays hot in midwest.

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