By Leslie N. Masonson, MBA
Weatherford International plc (WFRD), a Nasdaq-listed company, was incorporated in 1972 in Houston, Texas, where it is currently headquartered. It has $4.98 billion in annual sales and a market capitalization of $6.9 billion. The Company operates in 75 countries with 18,000 full-time employees in 335 operating locations.
Weatherford may not be a well-known name to most investors, as it operates in the innovative equipment and services category of the broad energy industry. Its services include production, drilling, geothermal and natural gas exploration aspects of the business. Last November 2022 the company signed an agreement with Honeywell to deliver advanced emissions management services. Also, in early October 2023 its Moody’s credit rating was increased to B1 from B2 with a positive outlook. This change signals the positive improvement in credit metrics, resulting from the reduction in balance sheet debt, coupled with earnings growth. This positive outlook portends the continuing robust demand for WFRD’s services.
WFRD is a member of the VectorVest Petroleum (Field Services) sector with a ranking of #1 out of 46 companies. Moreover, WFRD is also ranked #2 in the broader Petroleum sector out of 280 stocks. That sector contains such well-known companies such as Murphy USA, Matrix Services, Marathon Petroleum and TIdewater. The Petroleum sector is comprised of ten categories and the Field Services sector is ranked 136 out of 222, definitely in the lower 50% of the rankings. Even so, WFRD has outpaced its competitors and has a solid financial footing going forward. A strong company in a lower ranked group is even more impressive, as it is hard for a company to swim against the tide of most companies in its industry.
Currently, 328 institutions hold almost 100% of their shares outstanding. Among the top holders of the stock are Vanguard with 16.2% of the shares, followed by Capital Research Global Investors with 8.5%, and; Blackrock Inc. with 12.3% of the shares.
WFRD reached an all-time high on November 6, 2023 at $100.93 (see the chart below) and then backed off for two days, before reasserting the uptrend last Thursday and Friday. The stock closed at $50.92 on December 30, 2022, so it has risen 98% since then, a nice steady run over the course of this year with a respite in April to June, before climbing higher through mid-September. Like all stocks, it had a rough six weeks, but finally bottomed on October 5 near $84 before bolting to past $100 on November 6.
The MACD is flat, as is not currently crossed to the upside indicating that caution is necessary here. However, Its price is above its 40-dma and must remain above it to be considered for purchase. The RSI reading at 53 is positive in the mid-range of values, and isn’t considered overbought or oversold.
Weatherford’s Stable Metrics, Recent New High, and Undervaluation Are Positive Signs Going Forward, But It is Rated a “Hold” Right Now
The VectorVest software issues buy, sell, or hold recommendations on 9,145 stocks. This proprietary stock rating system splits the data into three simple ratings: relative value (RV), relative safety (RS), and relative timing (RT). Each is measured on a scale of 0.00-2.00, with 1.00 being the average for quick and easy interpretation, and 2.00 being the best.
The VectorVest ratings for WFRD are as follows:
- Excellent Upside Potential: The Relative Value (RV) rating focuses on a stock’s long-term, three-year price appreciation potential. The current RV rating for WFRD is 1.59 which is well above average. Moreover, VectorVest determined WFRD to be undervalued with a calculated value of $113.99, about 20% higher than its current price of $95.36
- Fair Safety: The Relative Safety (RS) rating is based on the company’s business longevity, financial predictability/consistency, debt-to-equity ratio, and additional risk parameters, including price volatility. Its RS rating of 0.95 is slightly below above, indicating a slightly above-average risk. Therefore, this stock can be considered by long-term conservative investors, but with a cautionary note.
- Good Timing: The Relative Timing (RT) rating focuses on the price trend over the short, medium, and long term. The components include price direction, dynamics, and price magnitude of price changes over daily, weekly, quarterly, and yearly comparisons. WFRD has an above-average RT rating of 1.19 compared to the average 0.85 RT of all the stocks in the database.
- Excellent Comfort Index: This index measures the consistency of a stock’s long-term resistance to severe and lengthy corrections. This index compares the individual stock to the fluctuation of the VectorVest Composite price. With a CI rating of 1.77, WFRD rating is exceptional and is well above average of all rated stocks. Therefore, this stock is suitable for all long-term conservative investors.
- Excellent Growth Rate (GRT): WFRD’s 46% forecasted growth rate is exceptional and is measured over a forecasted three-year period. Its sales growth of 17% per year is well above average. These fundamental factors are calculated in the VectorVest software, so you don’t have to do the work.
- Very Good VST Score: The VST Master Indicator ranks 9,145 stocks from high to low and brings to the top of the rankings those stocks with the highest VST scores. WFRD’s l score is 1.25 which is the upper 2% of the entire database, quite an accomplishment. Using VST enables users to determine stocks that are performing much better than average, as well as the opportunity to find the cream of the crop with a few mouse clicks. WFRD falls into that category.
With a multi-year positive EPS trend, this stock looks like a long-term winner. However, be aware of its Beta of 2.0 which means it is twice as volatile as the S&P 500 Index which may be a problem for conservative investors. The average daily volume of 1.4 million is certainly sufficient for traders looking for tight bid-to-ask spreads.
VectorVest just rated WFRD a “Hold” as of this past week. Considering the stock’s powerful advance for the year, coupled with increasing earnings, this stock should be placed on investors’ watchlists. Look for a possible entry if the stock exceeds its recent high, VectorVest gives it a “Buy” rating, and the Daily Color Guard is bullish. A price drop below $93 (40-dma) would warrant further evaluation and extreme caution.
Remember to check out VectorVest’s future ratings on this stock before making any move. You can analyze WFRD free using VectorVest to get the current recommendation which can change at any time based on market conditions.
Want These Types of Insights at Your Fingertips so You Can Win More Trades?
Use VectorVest to analyze any stock free. VectorVest is the only stock analysis tool and portfolio management system that analyzes, ranks and graphs over 18,000 stocks each day for value, safety, and timing and gives a clear buy, sell or hold rating on every stock, every day.
Before you invest, check VectorVest! Click here to ANALYZE ANY STOCK FREE and see our system in action!