Weatherford International Plc (NYSE:WFT) is giving 13% back this afternoon after its third-quarter earnings report fell on deaf ears. At this point, WFT stock missing earnings is routine. The company has lost money for nearly two full years now, and 2014’s profitability (engineered or not) is sorely missed.
Back in 2014, WFT stock traded hands in the low-to-mid-$20s. Now it goes for $5.55, and even that is hardly a bargain, as you’re paying for nonexistent earnings, and Weatherford’s bottom line is expected to plummet a whopping 212% for the year and lose 23.5% every year for the next five years. Ouch.
That’s not all: Average sales per employee are down from $327,680 in the second quarter of 2015 to $104,480 reported in the corresponding quarter this year. Meanwhile, short interest in WFT stock is up to 12% of the float.
This isn’t a cyclical thing here, either. This is self-destruction.
WFT Stock Earnings Rundown
Weatherford reported a loss of $1.78 billion, translating to a per-share loss of $1.98 on a GAAP basis. On a non-GAAP basis, WFT still lost 39 cents per share on revenues of $1.36 billion.
Its revenue dipped 3% sequentially, but managed to increase revenue in North America by 12%. On a year-over-year basis, revenue declined a head-throbbing 39%, while its operating loss ballooned to a 239% YoY decline. And that non-GAAP per-share loss is down 619% from the year-ago quarter.
Analysts were looking for a loss of 25 cents a share.
I could go on, but you get the picture. It’s bleak. It could, however, get better from here according to Weatherford’s chairman and CEO, Bernard J. Duroc-Danner:
“Our third quarter results represent the first period of revenue growth ex-Zubair, following seven consecutive industry-wide quarters of declining activity and pricing. Given that the industry bottomed during the second quarter, the worst of the historical downturn is behind us, and the market is slowly turning.
The company is taking measured steps to return to profitability and the good graces of investors. Namely, it has shown improvement in the U.S. and overseas in operating income and operating income margin. It has also reduced its workforce by 8,000 and saved $504 million for the year.
What’s more, WFT closed another five facilities in the past quarter, raising the year total to 59. WFT has also stopped operations in three of its manufacturing and service facilities, bringing the total to 10, one more than planned.
That’s just not enough.
Sentiment is sour on the highly volatile WFT stock, which recently made headlines for deceptive income tax accounting. The company was forced to pay a $140 million penalty on charges that it engaged in financial engineering for as long as 2007 to 2012.
Then, in 2013, Weatherford paid $250 million to the SEC, Department of Justice and the Department of Treasury after it was charged with bribing officials to bring in international business.
Yet, analysts remain sold on the stock, with 25 of the 36 analysts covering the stock rating it a “buy” or better. There are no sell recommendations. At press time, WFT stock is down 13% on more than twice its average volume. That’s quite the heap of sellers.
As of this writing, John Kilhefner did not hold a position in any of the aforementioned securities.