Drilling services company Nabors Industries (NYSE: NBR) reported Q1 CY2026 results topping the market’s revenue expectations, with sales up 6.8% year on year to $786.4 million. Its non-GAAP loss of $1.54 per share was 24.1% above analysts’ consensus estimates.

Is now the time to buy Nabors Industries? Find out by accessing our full research report, it’s free.

Anthony G. Petrello, Nabors Chairman, CEO and President, commented, "The conflict in the Middle East and its broader implications across global energy markets continue to reinforce the value of Nabors' portfolio and geographic diversification. While our business in that region was only modestly impacted in the first quarter, we are well positioned to respond to changes in activity levels across our markets, supported by our global fleet and operational flexibility.

Company Overview

Operating one of the largest land-based drilling rig fleets in the world with over 285 rigs across more than 15 countries, Nabors Industries (NYSE: NBR) operates drilling rigs and provides related services to help oil and gas companies drill wells on land and offshore platforms.

Revenue Growth

Cyclical industries such as Energy can make mediocre companies look great for a time, but a long-term view reveals which businesses can actually withstand and adapt to changing conditions. Over the last five years, Nabors Industries grew its sales at a decent 11.5% compounded annual growth rate. Its growth was slightly above the average energy upstream and integrated energy company and shows its offerings resonate with customers.

Even a long stretch in Energy can be shaped by a single commodity cycle, so extending the view to ten years adds another perspective and reveals which companies are built to grow regardless of the pricing regime. Nabors Industries’s annualized revenue growth of 0.6% over the last ten years is below its five-year trend, but we still think the results were respectable.

This quarter, Nabors Industries reported year-on-year revenue growth of 6.8%, and its $786.4 million of revenue exceeded Wall Street’s estimates by 2%.

WHILE YOU’RE HERE: The Next Palantir? One satellite company captures images of every point on Earth. Every single day. The Pentagon wants it. Hedge funds are using it to beat earnings. You’ve probably never heard of it.

This is what the early days of Palantir looked like before it became a $437 billion giant. Same playbook. Different technology. If you missed Palantir, you need to see this. Claim The Stock Ticker for Free HERE.

Adjusted EBITDA Margin

Nabors Industries was profitable over the last five years but held back by its large cost base. Its average EBITDA margin of 28.3% was weak for an upstream and integrated energy business.

On the plus side, Nabors Industries’s EBITDA margin rose by 4.4 percentage points over the last year.

In Q1, Nabors Industries generated an EBITDA margin profit margin of 26%, down 2 percentage points year on year. This reduction is quite minuscule and indicates the company’s overall cost structure has been relatively stable. This adjusted EBITDA beat Wall Street’s estimates by 2.1%.

Cash Is King

Adjusted EBITDA shows how profitable a company’s existing “rock” is before financing and reinvestment, while free cash flow shows how much value remains after paying to replace those wells. Because production declines over time, strong EBITDA can coexist with weak FCF if drilling is expensive or declines are steep. FCF therefore captures both operating efficiency and the cost of sustaining production.

Nabors Industries has shown weak cash profitability relative to peers over the last five years, giving the company fewer opportunities to return capital to shareholders. Its free cash flow margin averaged 2.3%, below what we’d expect for an upstream and integrated energy business.

Absolute FCF margin levels matter but so does stability of free cash flow. All else equal, we’d prefer a 25.0% average free cash flow margin that is quite steady no matter how commodity prices behave rather than extremely high margins when times are good and negative ones when they’re tough.

Nabors Industries’s ratio of quarterly free cash flow volatility to WTI crude price volatility over the past five years was 19.9 (lower is better), indicating that its cash generation is far more sensitive to commodity-price swings than most peers. This elevated volatility limits its access to capital in downturns and makes it unlikely to act as a consolidator when weaker competitors come under pressure.

You may be asking why we wait until the free cash flow line to perform this stability analysis versus commodity prices. Why not compare revenue or EBITDA to WTI Crude prices in the case of Nabors Industries? Because what ultimately matters is not how much revenue or profit you earn when prices are high but how much cash you can generate when prices are low. Free cash flow is the superior metric because it includes everything from hedging prowess to growth and maintenance capex to management behavior during good times and bad.

Nabors Industries burned through $48.22 million of cash in Q1, equivalent to a negative 6.1% margin. The company’s cash burn slowed from $77.22 million of lost cash in the same quarter last year. These numbers deviate from its longer-term margin, indicating it is a seasonal business that must build up inventory during certain quarters.

Key Takeaways from Nabors Industries’s Q1 Results

It was good to see Nabors Industries beat analysts’ EPS expectations this quarter. We were also glad its revenue outperformed Wall Street’s estimates. Overall, we think this was a decent quarter with some key metrics above expectations. The stock remained flat at $94.25 immediately after reporting.

Sure, Nabors Industries had a solid quarter, but if we look at the bigger picture, is this stock a buy? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).