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Why Is Helmerich & Payne (HP) Down 10.1% Since the Last Earnings Report?
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A month has gone by since the last earnings report for Helmerich & Payne, Inc. (HP - Free Report) . Shares have lost about 10.1% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? 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 drivers.
First-Quarter Fiscal 2017 Results
Helmerich & Payne reported net operating loss per share for the first fiscal quarter of 2017 (three months ended Dec 31, 2016) – excluding special items – of $0.41, wider than the Zacks Consensus Estimate of a loss of $0.37.
The underperformance could be tied to sharply lower drilling activity. The bottom line also compares unfavorably with the year-ago adjusted profit of $0.05.
Revenues of $368.6 million was down 24% from the first fiscal quarter of 2016 but came above the Zacks Consensus Estimate of $330.4 million amid greater operational efficiency.
Segment Performance
U.S. Land: During the quarter, operating revenues totaled $263.6 million (72% of total revenue), down 29% year over year. While average rig revenue per operating day was $24,788 - 13% below the year-ago period, average rig margin per day was down 39% to $9,584. Moreover, utilization levels dropped to 31% (from 39% in the first fiscal quarter of 2016), plunging the segment to an operating loss of $30.9 million. In the year-earlier quarter, income from the unit was $55.5 million.
Offshore: Helmerich & Payne’s ‘Offshore’ revenues were down 19% year over year to $33.8 million. Daily average rig revenue rose 14% to $31,317 and average rig margin per day jumped 32% to $10,478. However, these positive factors could not stop the decline in the segment operating income, which fell 12% from the previous year period to $6.8 million. The underperformance was mainly on account of lower rig utilization - coming down from the year-ago level of 89% to 78%.
International Land: Helmerich & Payne’s ‘International Land’ operations recorded revenues of $68 million, down from $72.2 million in the previous-year quarter. Average daily rig revenue was $55,880, up 21% from the corresponding period last year, while rig margin per day was $12,969, better than the $11,811 earned a year ago. As a result, despite declining activity levels - 33% as against 40% a year ago - the segment reported a small operating profit of $825,000, turning around from the $6.7 million loss incurred in the first quarter of fiscal 2016.
Capital Expenditure & Balance Sheet
During the quarter, Helmerich & Payne spent approximately $82.1 million on capital programs. As of Dec 31, 2016, the company had approximately $825.9 million in cash, while long-term debt stood at $492.1 million (debt-to-capitalization ratio of 9.9%).
Guidance
The Tulsa, OK-based company expects activity in the U.S. land segment to rise by 30-35% sequentially during the second fiscal quarter of 2017. While the average rig revenue per day is likely to be around $22,400, daily average rig cost is expected to go down to roughly $14,900 during next quarter.
As for the offshore segment, Helmerich & Payne sees the average rig margin per day to be around $12,000 during the second quarter of fiscal 2017 and revenue days to fall 10% sequentially.
Lastly, the international land segment will likely experience a decline in revenue days by 38% in the next quarter due to the premature termination of 5 rigs under long-term contracts, while average rig margin per day is expected to average roughly $5,000.
For fiscal 2017, Helmerich & Payne now expects a capital budget of $350 million. Up from the previous guidance of $200 million, the company cites U.S. land market demand improvement for the increased outlay.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There has been one revision higher for the current quarter compared to seven lower. In the past month, the consensus estimate has shifted 24.05% downward due to these changes.
At this time, Helmerich & Payne's stock has a subpar Growth Score of 'D', though it is lagging a bit on the momentum front with an 'F'. 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 aggregte VGM Score of 'D'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate investors will probably be better served looking elsewhere.
Outlook
Estimates have been broadly trending downward for the stock. the magnitude of these revisions alsp indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
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Why Is Helmerich & Payne (HP) Down 10.1% Since the Last Earnings Report?
A month has gone by since the last earnings report for Helmerich & Payne, Inc. (HP - Free Report) . Shares have lost about 10.1% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? 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 drivers.
First-Quarter Fiscal 2017 Results
Helmerich & Payne reported net operating loss per share for the first fiscal quarter of 2017 (three months ended Dec 31, 2016) – excluding special items – of $0.41, wider than the Zacks Consensus Estimate of a loss of $0.37.
The underperformance could be tied to sharply lower drilling activity. The bottom line also compares unfavorably with the year-ago adjusted profit of $0.05.
Revenues of $368.6 million was down 24% from the first fiscal quarter of 2016 but came above the Zacks Consensus Estimate of $330.4 million amid greater operational efficiency.
Segment Performance
U.S. Land: During the quarter, operating revenues totaled $263.6 million (72% of total revenue), down 29% year over year. While average rig revenue per operating day was $24,788 - 13% below the year-ago period, average rig margin per day was down 39% to $9,584. Moreover, utilization levels dropped to 31% (from 39% in the first fiscal quarter of 2016), plunging the segment to an operating loss of $30.9 million. In the year-earlier quarter, income from the unit was $55.5 million.
Offshore: Helmerich & Payne’s ‘Offshore’ revenues were down 19% year over year to $33.8 million. Daily average rig revenue rose 14% to $31,317 and average rig margin per day jumped 32% to $10,478. However, these positive factors could not stop the decline in the segment operating income, which fell 12% from the previous year period to $6.8 million. The underperformance was mainly on account of lower rig utilization - coming down from the year-ago level of 89% to 78%.
International Land: Helmerich & Payne’s ‘International Land’ operations recorded revenues of $68 million, down from $72.2 million in the previous-year quarter. Average daily rig revenue was $55,880, up 21% from the corresponding period last year, while rig margin per day was $12,969, better than the $11,811 earned a year ago. As a result, despite declining activity levels - 33% as against 40% a year ago - the segment reported a small operating profit of $825,000, turning around from the $6.7 million loss incurred in the first quarter of fiscal 2016.
Capital Expenditure & Balance Sheet
During the quarter, Helmerich & Payne spent approximately $82.1 million on capital programs. As of Dec 31, 2016, the company had approximately $825.9 million in cash, while long-term debt stood at $492.1 million (debt-to-capitalization ratio of 9.9%).
Guidance
The Tulsa, OK-based company expects activity in the U.S. land segment to rise by 30-35% sequentially during the second fiscal quarter of 2017. While the average rig revenue per day is likely to be around $22,400, daily average rig cost is expected to go down to roughly $14,900 during next quarter.
As for the offshore segment, Helmerich & Payne sees the average rig margin per day to be around $12,000 during the second quarter of fiscal 2017 and revenue days to fall 10% sequentially.
Lastly, the international land segment will likely experience a decline in revenue days by 38% in the next quarter due to the premature termination of 5 rigs under long-term contracts, while average rig margin per day is expected to average roughly $5,000.
For fiscal 2017, Helmerich & Payne now expects a capital budget of $350 million. Up from the previous guidance of $200 million, the company cites U.S. land market demand improvement for the increased outlay.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There has been one revision higher for the current quarter compared to seven lower. In the past month, the consensus estimate has shifted 24.05% downward due to these changes.
Helmerich & Payne, Inc. Price and Consensus
Helmerich & Payne, Inc. Price and Consensus | Helmerich & Payne, Inc. Quote
VGM Scores
At this time, Helmerich & Payne's stock has a subpar Growth Score of 'D', though it is lagging a bit on the momentum front with an 'F'. 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 aggregte VGM Score of 'D'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate investors will probably be better served looking elsewhere.
Outlook
Estimates have been broadly trending downward for the stock. the magnitude of these revisions alsp indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.