Core Insights - The market is witnessing a potential multi-year outperformance cycle for low-valuation equities and small caps, which have lagged for about a decade [2] - Value stocks outperformed growth stocks by 269-724 basis points across all market caps in Q4 [3] - The concentration of large-cap technology stocks has increased significantly, with the top 12 AI-linked stocks adding approximately $15 trillion in market cap since the launch of ChatGPT in 2022, while their revenue growth was only $650 billion [5] Market Performance - In Q4, value stocks across various market caps showed significant outperformance compared to growth stocks, with the Russell Top 200 value stocks returning 3.81% versus 1.12% for growth, resulting in a 2.69% difference [4] - Small caps have shown signs of recovery, with earnings growth slightly exceeding that of larger companies for the first time in thirteen quarters [7] - The Deep Value Select strategy returned +5.09% in the last quarter, outperforming both the S&P 1500 Value Index and the S&P 600 Value Index [12] Capital Expenditure Trends - The five largest AI hyperscalers have seen their combined capital expenditures rise from $97 billion in 2020 to approximately $400 billion in 2025, with expectations of exceeding $600 billion by 2027 [6] - Technology sector capital expenditures as a percentage of U.S. GDP are projected to surpass the peak of 1.2% seen in 2000 [6] Company-Specific Insights - Nabors Industries improved its balance sheet significantly, reducing debt leverage from over 6x to near 2x, and is well-positioned to benefit from a potential increase in global rig demand [14][17] - JELD-WEN is undergoing a multi-year transformation to improve profitability, despite facing challenges in the housing market [19] - Conduent is in the midst of a multi-year transformation, focusing on streamlining operations and reducing debt, with a significant portion of its shares repurchased [20][24] Valuation Insights - Small caps are currently trading at a forward 1-year price-to-earnings multiple that is 30% lower than large caps, indicating a potential for valuation expansion [8] - The valuation spread between large-cap growth and small-cap value is near historical extremes, suggesting that small-cap value may be poised for outperformance [12]

Financial Announcements - Nabors Industries Ltd. announced the complete redemption of its 7.500% Senior Guaranteed Notes due 2028[4] - Preliminary balance sheet figures for the year ended December 31, 2025, were disclosed[4]

Core Insights - Nabors Industries Ltd. announced the full redemption of its outstanding 7.500% Senior Guaranteed Notes due 2028, with a face value of approximately $379 million, redeemed at par plus accrued interest on January 15, 2026 [1] Financial Summary - As of December 31, 2025, total debt was approximately $2.5 billion, with cash and short-term investments around $940 million, resulting in net debt of approximately $1.55 billion, marking the lowest net leverage since 2008 [2] - The company reduced its net debt by approximately $366 million during the fourth quarter, equivalent to about $25 per common share, and by approximately $550 million since December 31, 2024 [2] - Following the redemption, long-term debt stands at approximately $2.15 billion, with the next debt maturity occurring in 2029, and the weighted average maturity of outstanding debt increased to 5.3 years from 3.7 years as of September 30, 2025 [3] Strategic Commentary - The redemption is viewed as a significant step in advancing the company's commitment to debt reduction, which is considered a core driver of shareholder value. The successful execution of transactions and strong operational performance contributed to this outcome [4]

Core Viewpoint - Nabors Industries Ltd. will discuss its fourth-quarter operating results for the period ending December 31, 2025, during a conference call scheduled for February 12, 2026, at 10:00 a.m. Central Time [1]. Group 1: Conference Call Details - The earnings release will occur after market close on February 11, 2026 [1]. - Dial-in numbers for the conference call include US Toll Free: (888) 317-6003, Canada Toll Free: (866) 284-3684, and International: (412) 317-6061 [2]. - Participants are advised to call 10 to 15 minutes ahead of time for proper connection [2]. Group 2: Replay and Webcast Information - The conference call will be recorded and available for replay until February 19, 2026, at 4:00 p.m. CT [3]. - The recording can be accessed by calling (877) 344-7529 in North America or (412) 317-0088 internationally, using Conference Replay Entry Number: 2053589 [3]. - A live audio webcast of the conference call will be available on Nabors' website, with an electronic version of the earnings release and any supplemental presentation also accessible for download [4]. Group 3: Company Overview - Nabors Industries Ltd. is a leading provider of advanced technology for the energy industry, operating in over 20 countries [5]. - The company focuses on delivering safe, efficient, and responsible energy production through its core competencies in drilling, engineering, automation, data science, and manufacturing [5]. - Nabors aims to innovate the future of energy and facilitate the transition to a lower-carbon world [5].

Core Insights - Nabors Industries Ltd. (NBR) is a prominent global land-drilling contractor providing services in nearly 20 countries, including oil, gas, and geothermal drilling, along with wellsite support services [1] - The company is currently facing significant challenges, including a series of loss-making quarters that have eroded market confidence and investor sentiment [2] Financial Performance - NBR's shares have declined by 2.1% over the past year, underperforming the broader oil and energy sector, which rose by 3.3%, but outperformed the Oil & Gas Drilling sub-industry's loss of 13.2% [3] - The company reported an adjusted loss of $3.67 in Q3 2025, missing the Zacks Consensus Estimate significantly, with an average negative surprise of 132.44% over the last four quarters [6][9] Operational Challenges - Persistent losses and earnings misses have weakened investor confidence, with free cash flow remaining fragile and reliant on one-off asset sales, such as the $625 million Quail Tools sale [7][11] - High capital expenditures are expected to continue, limiting financial flexibility and raising concerns about the company's ability to fund operations and reward shareholders without further asset divestments [12] Market Conditions - In the U.S. Lower 48, Nabors faces margin pressure due to rig churn, labor inefficiencies, and rising repair costs, which have offset any modest improvements in daily revenues [13] - The company's operations in Mexico present additional risks, including delayed payments from PEMEX and potential rig suspensions, negatively impacting cash flow visibility [14] Investment Outlook - The overall investment case for Nabors appears weak, with ongoing losses, fragile free cash flow, and elevated capital commitments limiting potential shareholder returns [15] - The stock has underperformed peers like Precision Drilling, Valaris, and Transocean, and lacks clear catalysts for a turnaround, suggesting a sell or exit strategy may be prudent for investors [16]

Core Viewpoint - Nabors Industries Ltd. (NYSE:NBR) has experienced a significant increase in share price and received a double upgrade from analysts, indicating strong potential for growth in the energy sector, particularly due to its operations in Saudi Arabia [1][3]. Group 1: Stock Performance - The share price of Nabors Industries surged by 2.74% between December 22 and December 29, 2025, making it one of the top-performing energy stocks for that week [1]. - Piper Sandler upgraded Nabors Industries from 'Underweight' to 'Overweight' and raised its price target from $32 to $65, suggesting an upside potential of nearly 22% from the current share price [3]. Group 2: Analyst Insights - The upgrade from Piper Sandler is attributed to Nabors being a major beneficiary of the resumption of work in Saudi Arabia, particularly through its SANAD land drilling joint venture [3]. - Barclays analyst Eddie Kim also increased the price target for Nabors from $45 to $50 but maintained an 'Underweight' rating, indicating a more cautious outlook compared to Piper Sandler [4]. Group 3: Operational Developments - Nabors' SANAD joint venture in Saudi Arabia received a notice to resume operations for two rigs that had been temporarily suspended, with expected return dates in March and June of the following year [4].

Core Insights - Nabors Industries Ltd. (NBR) has significantly underperformed compared to its peers and relevant benchmarks, with a share price decline of 12.4% over the past year, while the Oil and Gas – Drilling sub-industry grew by 4.8% [1][8] - The company faces operational challenges, market volatility, and ineffective business strategies, impacting its market position [3] Financial Performance - NBR's adjusted EBITDA decreased from $248 million in Q2 2025 to $236 million in Q3 2025, indicating pressure on profitability despite divesting a high-margin business [4] - The company is projected to have breakeven adjusted free cash flow for the full year 2025, limiting its capacity for debt reduction or shareholder returns [10] Market Challenges - The U.S. Lower 48 drilling market is experiencing muted activity and ongoing pressure, with a decline in average rig count and daily margins due to labor inefficiencies and harsh drilling conditions [5] - Operations in Mexico are facing significant uncertainty, with potential suspensions of offshore platform rigs and collection issues from PEMEX, leading to cash flow challenges [6][9] Capital Expenditures and Debt Management - NBR's capital expenditures are high, estimated at $715-$725 million for 2025, with no expected decline in 2026, consuming cash and limiting financial flexibility [10] - The reduction in net debt to a decade low was primarily due to a one-time asset sale, raising questions about the sustainability of leverage improvement without further divestitures [11] Segment Performance - The Drilling Solutions segment's EBITDA showed only modest growth, with competitive pressures limiting pricing power in a challenging market [12] - The Rig Technologies segment reported a decline in EBITDA due to reduced demand for aftermarket offerings, reflecting a broader slowdown in capital equipment spending [16] Future Outlook - Management's guidance for Q4 2025 indicates stagnation in total EBITDA, with expectations of a decline in specific segments, suggesting a lack of operational momentum [15] - The company's dependence on the SANAD joint venture in Saudi Arabia raises concentration risk, as its success is tied to the capital spending plans of a single national oil company [14]

Market Overview - The market rebound that began in April continued into the third quarter of 2025, with growth and momentum stocks delivering double-digit returns [1] - Small and micro-cap value stocks achieved their best quarterly returns since Q4 2023 [1] Performance of Deep Value Strategy - The Deep Value strategy appreciated by +26.50% in Q3 2025, outperforming the S&P 1500 Value Index (+6.29%) and the S&P 600 Value Index (+11.71%) [1] - Year-to-date, the strategy's net returns are +9.20%, compared to +9.28% for the S&P 1500 Value Index and +3.17% for the S&P 600 Value Index [1] Focus on Nabors Industries Ltd. - Nabors Industries Ltd. (NYSE:NBR) was highlighted as a significant holding, with a one-month return of 10.40% and a 52-week loss of 14.64% [2] - On December 04, 2025, Nabors Industries' stock closed at $56.91 per share, with a market capitalization of $829.501 million [2] Performance and Strategy of Nabors Industries - Nabors Industries was the largest positive contributor to the Deep Value strategy, with a market share price increase of 46% during the quarter [3] - The company is undergoing a multi-year transformation focused on leveraging leading technology, holding over 450 patents and developing industry-leading drilling automation and robotics [3] - Nabors sold its Quail Tools business segment for $600 million, with proceeds aimed at accelerating debt reduction and enhancing the company's balance sheet and liquidity [3]

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Core Insights - Nabors Industries Ltd. has received credit rating upgrades from two major agencies, reflecting the company's efforts to improve its balance sheet and reduce debt [1][4]. Group 1: Credit Ratings Actions - S&P Global Ratings upgraded Nabors' issuer credit rating to 'B' from 'B-' with a stable outlook and assigned a 'B+' rating to the recently issued Senior Priority Guaranteed Notes (SPGN) [4]. - Fitch Ratings also upgraded Nabors' Long Term Issuer Default Rating to 'B' from 'B-' with a stable outlook and assigned a 'BB-' rating to the recently issued SPGN [4]. - Moody's Investors Service assigned a rating of 'Ba3' to Nabors' recent SPGN issue, consistent with its rating on existing SPGN [4]. Group 2: Company Performance and Strategy - The company has made significant progress in deleveraging and strengthening its balance sheet, which has been recognized by credit rating agencies [2]. - Nabors aims to leverage its core competencies in drilling, engineering, automation, data science, and manufacturing to innovate in the energy sector and support the transition to a lower-carbon world [2].