NBR

Nabors finally turned the corner in FY2025: revenue grew +8.7% to $3.18B and the company swung to $287M net income after four straight loss years (FY2021–24 lost $569M, $350M, $11.8M, $176M). Cash more than doubled to $941M, long-term debt fell 15.5% to $2.12B and the current portion dropped 40% to $377M. On the screen it looks dirt cheap — 4.8x earnings, 0.4x sales, 48.5% ROE. But almost none of that headline is what it appears. Operating income rose only +13% to $471M, yet net income jumped +263% and EPS +178% — the gap is below the operating line. The MD&A explains it: the August 2025 sale of Quail Tools to Superior Energy for $625M net (cash plus a now-prepaid $250M seller note) almost certainly seeded a large one-time gain. Strip that, and the 'cheap' P/E is a mirage and the 48.5% ROE is an artifact of a razor-thin $591M equity base that exists only because of a -$1.84B accumulated deficit.

The balance sheet and cash flow keep this from being a buy. Liabilities are 5.67x equity; equity holders sit on a thin leveraged sliver atop ~$2.5B of debt. Operating cash flow of $693M was outspent by $716M of capex — free cash flow was negative (~-$23M) even in a 'good' year, and 2026 carries $371.4M of the $410.7M purchase commitments. November 2025's $700M of 7.625% senior notes locks in expensive interest, and the 10-K's own risk factors flag credit-rating sensitivity, reliance on subsidiary dividends as a holding company, and ongoing receivables factoring ($137M sold of a $250M facility) — all signs of a company actively managing liquidity rather than swimming in it.