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Helmerich & Payne (HP) Up 20.3% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Helmerich & Payne (HP - Free Report) . Shares have added about 20.3% 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 Q1 Loss Narrower Than Expected
Helmerich & Payne reported fiscal first-quarter 2022 adjusted loss of 45 cents per share, narrower than the Zacks Consensus Estimate of 50 cents. In the year-ago period, the company had incurred a loss of 82 cents per share. The outperformance reflects a significant uptick in activity.
Meanwhile, operating revenues of $409.8 million topped the Zacks Consensus Estimate of $377 million and increased 66.3% from the year-ago level on strong results from the key North America Solutions segment. Precisely, sales from the unit totaled $341 million, ahead of the consensus mark of $337 million.
Highlighting the recovery from pandemic blues, Helmerich & Payne claims to have captured a roughly 35% market share for super spec rigs compared to less than 20% at the height of the pandemic.
Segment Performance
North America Solutions: During the quarter, operating revenues of $341 million were up 68.8% year over year on higher activity levels, with the average number of active rigs falling from 81 to 141. The steep uptick drilling works on the back of stronger oil and gas prices meant that the segment cut its operating loss from $72.9 million to $29 million in a year.
Offshore Gulf of Mexico: Revenues of $29.3 million decreased 9.2% from the year-ago quarter as there was one less average active rig (4). However, operating expenses during the October-December period of 2021 fell 21.1% year over year, resulting in the segment’s operating profit doubling from the prior-year period to $5.5 million.
International Solutions: The segment’s operations generated revenues of $37.2 million, up from $10.5 million in the corresponding period of 2020 – again due to improved activity levels, with the average number of active rigs rising 100% from 4 to 8. The unit reported a profit of $8 million, turning around from the loss of $8.4 million incurred in the corresponding period a year ago. Apart from increased drilling, the International Solutions segment benefited from a contractual dispute settlement.
Financial Position
In the reported quarter, Helmerich & Payne spent $44 million on capital programs. As of Dec 31, 2021, the company had $234.2 million in cash and cash equivalents while long-term debt was $542.2 million (debt-to-capitalization of 16.3%). The company repurchased around $60.4 million in stock during the quarter and an additional $16.4 million so far in 2022.
Guidance
With the rig market tightening, Helmerich & Payne sees certain leading-edge contracts getting revenue per day of around $30,000 compared to $23,000 in the reported quarter.
This Tulsa, OK-based company anticipates operating gross margins in the North America Solutions segment between $100 million and $115 million in the fiscal second quarter. It sees around 165-175 contracted rigs by Mar 31, 2022.
Coming to the Offshore Gulf of Mexico segment, Helmerich & Payne envisions operating gross margins within $6-$8 million for the fiscal second quarter.
Additionally, International Solutions operating gross margins are forecast between a loss of $2 million and breakeven for the current quarter.
For the current fiscal year, Helmerich & Payne still estimates capital outlay within $250-$270 million, while it hopes to have between $400 million and $450 million of cash and short-term investments on hand by Sep 30, 2022.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
The consensus estimate has shifted 10.22% due to these changes.
VGM Scores
Currently, Helmerich & Payne has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% 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 upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Helmerich & Payne has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Helmerich & Payne (HP) Up 20.3% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Helmerich & Payne (HP - Free Report) . Shares have added about 20.3% 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 Q1 Loss Narrower Than Expected
Helmerich & Payne reported fiscal first-quarter 2022 adjusted loss of 45 cents per share, narrower than the Zacks Consensus Estimate of 50 cents. In the year-ago period, the company had incurred a loss of 82 cents per share. The outperformance reflects a significant uptick in activity.
Meanwhile, operating revenues of $409.8 million topped the Zacks Consensus Estimate of $377 million and increased 66.3% from the year-ago level on strong results from the key North America Solutions segment. Precisely, sales from the unit totaled $341 million, ahead of the consensus mark of $337 million.
Highlighting the recovery from pandemic blues, Helmerich & Payne claims to have captured a roughly 35% market share for super spec rigs compared to less than 20% at the height of the pandemic.
Segment Performance
North America Solutions: During the quarter, operating revenues of $341 million were up 68.8% year over year on higher activity levels, with the average number of active rigs falling from 81 to 141. The steep uptick drilling works on the back of stronger oil and gas prices meant that the segment cut its operating loss from $72.9 million to $29 million in a year.
Offshore Gulf of Mexico: Revenues of $29.3 million decreased 9.2% from the year-ago quarter as there was one less average active rig (4). However, operating expenses during the October-December period of 2021 fell 21.1% year over year, resulting in the segment’s operating profit doubling from the prior-year period to $5.5 million.
International Solutions: The segment’s operations generated revenues of $37.2 million, up from $10.5 million in the corresponding period of 2020 – again due to improved activity levels, with the average number of active rigs rising 100% from 4 to 8. The unit reported a profit of $8 million, turning around from the loss of $8.4 million incurred in the corresponding period a year ago. Apart from increased drilling, the International Solutions segment benefited from a contractual dispute settlement.
Financial Position
In the reported quarter, Helmerich & Payne spent $44 million on capital programs. As of Dec 31, 2021, the company had $234.2 million in cash and cash equivalents while long-term debt was $542.2 million (debt-to-capitalization of 16.3%). The company repurchased around $60.4 million in stock during the quarter and an additional $16.4 million so far in 2022.
Guidance
With the rig market tightening, Helmerich & Payne sees certain leading-edge contracts getting revenue per day of around $30,000 compared to $23,000 in the reported quarter.
This Tulsa, OK-based company anticipates operating gross margins in the North America Solutions segment between $100 million and $115 million in the fiscal second quarter. It sees around 165-175 contracted rigs by Mar 31, 2022.
Coming to the Offshore Gulf of Mexico segment, Helmerich & Payne envisions operating gross margins within $6-$8 million for the fiscal second quarter.
Additionally, International Solutions operating gross margins are forecast between a loss of $2 million and breakeven for the current quarter.
For the current fiscal year, Helmerich & Payne still estimates capital outlay within $250-$270 million, while it hopes to have between $400 million and $450 million of cash and short-term investments on hand by Sep 30, 2022.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
The consensus estimate has shifted 10.22% due to these changes.
VGM Scores
Currently, Helmerich & Payne has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% 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 upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Helmerich & Payne has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.