Analyst Loosely Defends Weatherford (WFT)

Gabelli & Co. is issuing a very loose defense of Weatherford International, Ltd. (NYSE: WFT) after Tuesday’s earnings blunder.  This can be a dangerous game any time there is a withdrawal of financial expectations over accounting.  What Gabelli noted was that the firm is lowering its 2012 EPS estimate to $1.25 from $1.40.  The move is primarily to reflect a higher tax rate and also to reflect higher corporate expenses. 

As far as next year, Gabelli is introducing a 2013 estimate of $1.70 EPS.  The report confirmed that the company did not report an earnings per share figure due to the restatement of income tax expenses.

Gabelli believes that Weatherford would likely have reported earnings at a loss of -$0.01 EPS based upon a $500 million income tax expense for the full year and $350 million in the fourth quarter. 

Here is the key takeaway… Weatherford trades at only six-times Gabelli’s 2012 EBITDA estimate and about 12.3-times the firm’s 2012 earnings per share target.  The summary: Weatherford is attractively valued.

Shares are indicated up less than 1% in the pre-market at $15.50 but that is after a 13.6% drop on Tuesday on more than 62 million shares.  Tuesday was the most trading volume seen in about a year in Weatherford shares.