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Helmerich & Payne (HP) Up 20.2% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Helmerich & Payne (HP - Free Report) . Shares have added about 20.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Helmerich & Payne due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Helmerich & Payne's Q4 Loss Narrower Than Expected
Helmerich & Payne posted adjusted quarterly loss of 74 cents per share narrower than the Zacks Consensus Estimate of a loss of 80 cents per share owing to better-than-expected revenues from International Solutions segment. Precisely, the unit generated operating revenues of $24 million beating the Zacks Consensus Estimate of $17.13 million. However, the bottom line came against the year-ago earnings of 39 cents per share. This underperformance can be attributed to steep decline in rig activity as a result of coronavirus-induced lower crude prices.
Meanwhile, operating revenues of $208.27 million missed the Zacks Consensus Estimate of $212 million and decreased 67.9% from the year-ago level of $649.05 million.
Segmental Performance
North America Solutions: During the quarter, operating revenues of $149.3 million were down 73.3% year over year as revenue days fell 68.3% to 5,945.
Rig utilization dropped to 25% from the prior-year’s 68%. The segment’s operating loss came in at $78.2 million against the year-earlier profit of $60.4 million. Moreover, the average rig margin per day declined 39% from the prior-year quarter to $6,603. Further, rig revenue per day was down in the quarter under review.
Offshore Gulf of Mexico: Revenues of $32.3 million were down from the year-ago quarter’s $38.5 million as revenue days declined 16.6% to 460. Rig utilization plummeted to 63% from the prior-year’s 75%. Moreover, higher average rig expenses per day and increased depreciation expenses resulted in the segment’s operating income of $1. 5 million, lower than the profit of $2.8 million in the prior-year quarter.
Although daily average rig revenues rose 8.9% from the year-ago figure, rig expense per day climbed 5.6%. Meanwhile, the segment recorded average rig margin per day of $7,663 in the quarter under review compared to $7,460 in the year-ago quarter.
International Solutions: Operations generated revenues of $24 million, down from $48.4 million in the prior-year quarter.
While rig utilization decreased to 15% from 56% in the prior-year quarter, average rig revenue per day increased from the year-ago quarter to $45,986. The average rig margin per day decreased 42.1% from the year-ago quarter to $3,170. The segment’s bottom line induced an operating loss of $3.47 million, narrower than the loss of $4.2 million a year ago.
Capital Expenditure & Balance Sheet
In the reported quarter, Helmerich & Payne spent $19.8 million on capital programs. As of Sep 30, 2020, the company had $487.9 million in cash and cash equivalents while net long-term debt was $480.7 million (debt-to-capitalization of 12.7%).
Guidance
This Tulsa, OK-based company anticipates operating gross margins in the North America Solutions segment in the first quarter of fiscal 2021 to be between $40 million and $50 million.
Coming to the offshore Gulf of Mexico segment, Helmerich & Payne envisions operating gross margins within $5-7 million for the fiscal first quarter and operating income in the $1-$2 million range.
Additionally, international Solutions operating gross margins are forecast in a negative $5-$7 million range for the current quarter.
For the next fiscal year, Helmerich & Payne estimates capital outlay within $85-$105 million.
Helmerich & Payne expects its North America Solutions contracted rigs to increase by 30% during fiscal first quarter of 2021, exiting at approximately 90 rigs.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -9.89% due to these changes.
VGM Scores
Currently, Helmerich & Payne has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. 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. Notably, Helmerich & Payne has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Helmerich & Payne (HP) Up 20.2% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Helmerich & Payne (HP - Free Report) . Shares have added about 20.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Helmerich & Payne due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Helmerich & Payne's Q4 Loss Narrower Than Expected
Helmerich & Payne posted adjusted quarterly loss of 74 cents per share narrower than the Zacks Consensus Estimate of a loss of 80 cents per share owing to better-than-expected revenues from International Solutions segment. Precisely, the unit generated operating revenues of $24 million beating the Zacks Consensus Estimate of $17.13 million. However, the bottom line came against the year-ago earnings of 39 cents per share. This underperformance can be attributed to steep decline in rig activity as a result of coronavirus-induced lower crude prices.
Meanwhile, operating revenues of $208.27 million missed the Zacks Consensus Estimate of $212 million and decreased 67.9% from the year-ago level of $649.05 million.
Segmental Performance
North America Solutions: During the quarter, operating revenues of $149.3 million were down 73.3% year over year as revenue days fell 68.3% to 5,945.
Rig utilization dropped to 25% from the prior-year’s 68%. The segment’s operating loss came in at $78.2 million against the year-earlier profit of $60.4 million. Moreover, the average rig margin per day declined 39% from the prior-year quarter to $6,603. Further, rig revenue per day was down in the quarter under review.
Offshore Gulf of Mexico: Revenues of $32.3 million were down from the year-ago quarter’s $38.5 million as revenue days declined 16.6% to 460. Rig utilization plummeted to 63% from the prior-year’s 75%. Moreover, higher average rig expenses per day and increased depreciation expenses resulted in the segment’s operating income of $1. 5 million, lower than the profit of $2.8 million in the prior-year quarter.
Although daily average rig revenues rose 8.9% from the year-ago figure, rig expense per day climbed 5.6%. Meanwhile, the segment recorded average rig margin per day of $7,663 in the quarter under review compared to $7,460 in the year-ago quarter.
International Solutions: Operations generated revenues of $24 million, down from $48.4 million in the prior-year quarter.
While rig utilization decreased to 15% from 56% in the prior-year quarter, average rig revenue per day increased from the year-ago quarter to $45,986. The average rig margin per day decreased 42.1% from the year-ago quarter to $3,170. The segment’s bottom line induced an operating loss of $3.47 million, narrower than the loss of $4.2 million a year ago.
Capital Expenditure & Balance Sheet
In the reported quarter, Helmerich & Payne spent $19.8 million on capital programs. As of Sep 30, 2020, the company had $487.9 million in cash and cash equivalents while net long-term debt was $480.7 million (debt-to-capitalization of 12.7%).
Guidance
This Tulsa, OK-based company anticipates operating gross margins in the North America Solutions segment in the first quarter of fiscal 2021 to be between $40 million and $50 million.
Coming to the offshore Gulf of Mexico segment, Helmerich & Payne envisions operating gross margins within $5-7 million for the fiscal first quarter and operating income in the $1-$2 million range.
Additionally, international Solutions operating gross margins are forecast in a negative $5-$7 million range for the current quarter.
For the next fiscal year, Helmerich & Payne estimates capital outlay within $85-$105 million.
Helmerich & Payne expects its North America Solutions contracted rigs to increase by 30% during fiscal first quarter of 2021, exiting at approximately 90 rigs.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -9.89% due to these changes.
VGM Scores
Currently, Helmerich & Payne has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. 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. Notably, Helmerich & Payne has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.