Nabors Industries (NYSE: NBR) and Patterson-UTI Energy (NASDAQ:PTEN) are both oils/energy companies, but which is the superior business? We will compare the two companies based on the strength of their earnings, analyst recommendations, institutional ownership, dividends, profitability, valuation and risk.

Profitability

This table compares Nabors Industries and Patterson-UTI Energy’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Nabors Industries -32.35% -13.31% -5.32%
Patterson-UTI Energy -23.78% -10.03% -6.29%

Volatility and Risk

Nabors Industries has a beta of 1.57, indicating that its stock price is 57% more volatile than the S&P 500. Comparatively, Patterson-UTI Energy has a beta of 0.98, indicating that its stock price is 2% less volatile than the S&P 500.

Dividends

Nabors Industries pays an annual dividend of $0.24 per share and has a dividend yield of 3.7%. Patterson-UTI Energy pays an annual dividend of $0.08 per share and has a dividend yield of 0.5%. Nabors Industries pays out -9.4% of its earnings in the form of a dividend. Patterson-UTI Energy pays out -4.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Nabors Industries has raised its dividend for 3 consecutive years. Nabors Industries is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Nabors Industries and Patterson-UTI Energy, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Nabors Industries 0 8 18 0 2.69
Patterson-UTI Energy 0 12 17 0 2.59

Nabors Industries currently has a consensus price target of $13.32, suggesting a potential upside of 104.27%. Patterson-UTI Energy has a consensus price target of $27.41, suggesting a potential upside of 61.23%. Given Nabors Industries’ stronger consensus rating and higher possible upside, equities research analysts clearly believe Nabors Industries is more favorable than Patterson-UTI Energy.

Earnings & Valuation

This table compares Nabors Industries and Patterson-UTI Energy’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Nabors Industries $2.25 billion 0.83 $535.84 million ($2.55) -2.56
Patterson-UTI Energy $1.34 billion 2.69 $260.21 million ($1.97) -8.63

Nabors Industries has higher revenue and earnings than Patterson-UTI Energy. Patterson-UTI Energy is trading at a lower price-to-earnings ratio than Nabors Industries, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

95.6% of Nabors Industries shares are held by institutional investors. Comparatively, 98.6% of Patterson-UTI Energy shares are held by institutional investors. 4.1% of Nabors Industries shares are held by insiders. Comparatively, 4.6% of Patterson-UTI Energy shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Summary

Nabors Industries beats Patterson-UTI Energy on 10 of the 16 factors compared between the two stocks.

About Nabors Industries

Nabors Industries Ltd. owns and operates a land-based drilling rig fleet. The Company is a provider of offshore platform drilling rigs in the United States and multiple international markets. The Company conducts its Drilling & Rig Services business through four segments: U.S. Drilling, Canada Drilling, International Drilling and Rig Services. The Company provides wellbore placement services, drilling software and performance tools, drilling equipment and various technologies throughout the oil and gas markets. The Company’s Drilling & Rig Services business comprises land-based and offshore drilling rig operations and other rig services, consisting of equipment manufacturing, rig instrumentation and optimization software. The Company is a provider of directional drilling and measurement while drilling (MWD) systems and services. The Company also provides drilling technology and equipment, and well-site services.

About Patterson-UTI Energy

Patterson-UTI Energy, Inc. is an oilfield services company. The Company owns and operates a fleet of land-based drilling rigs and a fleet of pressure pumping equipment in the United States. The Company’s segments include Contract Drilling, Pressure Pumping and Other operations. The Contract Drilling segment markets its contract drilling services to independent and other oil and natural gas operators. As of December 31, 2016, the Company had 202 marketed land-based drilling rigs. The Pressure Pumping segment provides pressure pumping services to oil and natural gas operators primarily in Texas (Southwest Region) and the Appalachian region (Northeast Region). The Other operations segment includes the Company’s pipe handling components and related technology business, the oil and natural gas working interests and the Middle East/North Africa business. In addition, the Company owns and invests in oil and natural gas assets as a non-operating working interest owner in Texas and New Mexico.

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