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On Oct 3, Zacks Investment Research upgraded Pioneer Energy Services Corp. (PES - Snapshot Report) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

The drilling & exploration company Pioneer Energy Services Corp. has delivered positive earnings surprises in 3 of the last 4 quarters with an average beat of 97.62%. The long-term sales growth of the company is 18.67%.

The company registered another strong performance in the last quarter, with its earnings per share of 2 cents surpassing our estimate of a loss of 4 cents by 150%. The top line too beat the Zacks Consensus Estimate by nearly 6%.

The strong performance has given Pioneer Energy the financial flexibility to lower outstanding debts. Pioneer Energy Services expects capital expenditure for 2013 to be between $140 million and $160 million. Capital spending will enable the company to fund its new-build drilling rig program, upgrade its drilling rigs and procure Production Services equipment besides carrying out routine capital expenditures.

The capital invested by the company to upgrade its drilling rigs is yielding positive results. Pioneer Energy Services rigs are performing well, with the overall rig fleet  running at less than 2% downtime, and new rigs running less than half of 1% downtime. This level of performance efficiency will ensure more clients for the company.

The Zacks Consensus Estimate for 2013 increased 10% in the last 60 days to (9 cents) per share and, for 2014, the consensus increased 200% in the last 60 days to 3 cents per share.
Other Stocks to Consider

Besides Pioneer Energy Services, a few other companies in the sector are also performing well and have a favorable Zacks Rank. The stocks worth considering are Noble Corp. (NE - Analyst Report), Pacific Drilling S.A. (PACD - Snapshot Report) and Tesco Corporation (TESO - Snapshot Report). Noble Corp. and Pacific Drilling have a Zacks Rank #2 (Buy) while Tesco Corporation has a Zacks Rank #1 (Strong Buy).

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