Weatherford International Is Stumbling in a Weak OFS Industry
Weatherford’s operating cash flow and capex
In this part of the series, we’ll see how Weatherford International’s (WFT) operating cash flows have trended over the past few quarters. We’ll also see how its free cash flows (or FCF) were affected given its capex (capital expenditures).
Weatherford International’s cash from operating activities (or CFO) decreased 45% in fiscal 4Q15 over fiscal 4Q14. WFT generated $323 million in CFO in fiscal 4Q15, and revenues declined in the past one year, leading to lower CFO.
Weatherford’s free cash flow
In the past 12 quarters, until fiscal 4Q15, Weatherford International’s FCF has been volatile. It reduced capex by 65% in the past one year until fiscal 4Q15. Lower capex offset CFO’s shrinkage, and in effect, FCF increased marginally in the past one year. In fiscal 4Q15, WFT’s FCF was $183 million compared to $179 million a year ago.
In comparison, Noble Corporation (NE) saw a 3.5x FCF rise in fiscal 4Q15 over fiscal 4Q14. Noble is Weatherford International’s lower market cap peer, generating $367.3 million FCF in fiscal 4Q15. Weatherford International is 0.45% of the Vanguard Energy ETF (VDE).
Next, we’ll look at Weatherford International’s historical valuation multiples.
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