Weatherford (WFRD) Up 5.9% Since Last Earnings Report: Can It Continue?

WFRD Q2 Earnings Miss Estimates

Weatherford reported second-quarter 2026 earnings of 55 cents per share, down 70.6% from $1.87 a year ago. The bottom line missed the Zacks Consensus Estimate of 92 cents by 40.2%.

Quarterly revenues of $1.11 billion beat the consensus estimate of $1.06 billion by 3.8% but declined 8.2% year over year.

Weak quarterly earnings can be attributed to disruptions in the Middle East and lower activity across several markets.

WFRD’s Regional Results Reflect Broad Pressure

North America revenues fell 15% year over year to $205 million. Lower Artificial Lift and Cementation Products activity affected the segment, partially offset by stronger Completions activity in the U.S. offshore market.

International revenues declined to $900 million from $963 million in the year-ago quarter. Latin America revenues edged up 1% year over year to $197 million, backed by stronger Completions activity in the Caribbean and managed pressure drilling in Mexico.

Middle East/North Africa/Asia revenues dropped 15% from the year-ago period to $446 million in the second quarter due to escalating geopolitical tensions that disrupted activity. Europe/Sub-Sahara Africa/Russia revenues rose to $257 million, up 5% from the corresponding period in 2025, driven by stronger Pressure Pumping and managed pressure drilling activity, partially offset by reduced Drilling Services activity in Europe.

Weatherford’s Segment Results

Drilling and Evaluation revenues decreased 13% year over year to $291 million. Segment adjusted EBITDA fell 16% to $58 million, primarily due to lower Wireline and drilling-related services activity, partly offset by stronger managed pressure drilling performance in Europe/Sub-Sahara Africa/Russia.

Well Construction and Completions revenues declined 5% from the prior-year quarter to $433 million, while segment adjusted EBITDA fell 9% to $107 million. Revenues in the segment were pressured by lower activity in the Middle East/North Africa/Asia, while higher Completions activity in Latin America partially offset the impact.

Production and Intervention revenues slipped to $316 million, down 3% from the prior-year period due to reduced Artificial Lift activity in North America and Latin America. However, segment adjusted EBITDA increased to $70 million from $63 million in the second quarter of 2025, supported by stronger fall-through in Intervention Services and Drilling Tools in North America and Europe/Sub-Sahara Africa/Russia.

WFRD’s Profitability Faces Operational Headwinds

Operating income totaled $107 million, down approximately 55% from $237 million in the prior-year quarter. Net income attributable to Weatherford declined to $39 million from $136 million a year ago, while the net income margin was 3.5% in the reported quarter.

Adjusted EBITDA totaled $223 million, down 12% year over year. The company absorbed the impact of lower activity, pricing pressure and elevated freight and logistics costs related to the Middle East conflict.

Moreover, reduced activity in Indonesia and a union strike in Norway further pressured performance in the second quarter. Cost discipline helped keep the adjusted EBITDA margin nearly flat sequentially despite the weaker revenue base.

Weatherford Strengthens Cash Flow and Liquidity

Cash provided by operating activities was $175 million, up 37% year over year. Adjusted free cash flow increased 76% to $139 million, supported by working capital improvement, continued customer collections and lower capital spending. Capital expenditures were $42 million in the second quarter.

Weatherford returned $36 million to shareholders through $20 million in dividends and $16 million in share repurchases. The company ended the quarter with approximately $1.14 billion of cash and restricted cash, total liquidity of $1.7 billion and a net leverage ratio of 0.34X. Weatherford’s long-term debt at the end of the quarter stood at $1.45 billion.

WFRD Advances Key Strategic Initiatives

Weatherford agreed to acquire NCS Multistage in a stock-and-cash transaction that expands its completions portfolio and exposure to unconventional resources. Management expects the deal to generate at least $15 million of annual cost synergies within 18 months of closing.

The company also introduced an updated proposal to redomesticate from Ireland to Delaware. Subject to shareholder and Irish High Court approvals, the move is expected to generate annual cash savings of $20-$30 million beginning in 2027.

Weatherford Updates Guidance Amid Gradual Recovery

For the third quarter of 2026, management expects revenues of $1.11-$1.16 billion and adjusted EBITDA of $235-$265 million. Adjusted free cash flow is projected to exceed $100 million. The outlook assumes a progressive recovery in the Middle East, partly offset by activity declines in certain markets and the expiration of a Saudi contract.

For 2026, Weatherford now expects revenues of $4.54-$4.80 billion and adjusted EBITDA of $951 million to $1.05 billion. Adjusted free cash flow conversion is projected in the mid-to-high 40% range. Management expects the Middle East recovery to remain gradual and dependent on regional stability.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

The consensus estimate has shifted -11.55% due to these changes.

VGM Scores

Currently, Weatherford has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Weatherford has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.

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This article originally published on Zacks Investment Research (zacks.com).

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