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Patterson-UTI (PTEN) Up 7.1% Since Last Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Patterson-UTI (PTEN - Free Report) . Shares have added about 7.1% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Patterson-UTI 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 drivers.

Patterson-UTI Reports Better-than-Expected Q3 Earnings

Patterson-UTI reported a third-quarter 2022 adjusted net profit of 28 cents per share, beating the Zacks Consensus Estimate of a profit of 19 cents. This outperformance can be attributed to third-quarter revenues beating the consensus mark due to solid segmental performances.

Moreover, the profit beat the year-ago quarter's loss of 44 cents per share on accelerated rig activity and much higher energy prices.

The company’s total quarterly revenues of $727.5 million outperformed the Zacks Consensus Estimate of $684 million. Moreover, the top line improved by an impressive 103.3% on a year-over-year basis.

In good news for investors, Patterson-UTI doubled its quarterly cash dividend to 8 cents per share from the previous 4-cent payout. The dividend will be paid out on Dec 15, 2022 to shareholders of record as of Dec 1, 2022. Moreover, PTEN also increased its share repurchase authorization to $300 million.

Segmental Performances

Contract Drilling: Revenues totaled $356 million, up by 125.5% from the last year’s third-quarter figure of $157.9 million due to continued day rate pricing momentum, contract renewals and increasing activity.

The unit posted an operating profit of $43.3 million in the third quarter, outperforming the year-ago loss of $51.8 million due to favorable pricing.  

Pressure Pumping: Revenues of $287.7 million rose about 88.5% from the year-ago figure of $152.6 million due to better pricing.

Moreover, the segment posted an operating profit of $48.9 million compared to a loss of $13.7 million in the third quarter of 2021. The profit is attributable to active spreads being highly utilized in the reported quarter and better customer pricing.

Directional Drilling: Revenues summed at $58.9 million, up 85.5% year over year from the last year’s figure of $31.7 million due to higher activity and more favorable pricing. Moreover, the segment posted an operating profit of $4.4 million against a loss of $4.6 million reported in the corresponding quarter of 2021.

Other Operations: Revenues were $24.9 million, up about 59.8% more than the year-ago quarter’s $15.6 million as activity levels improved. The unit also posted a quarterly profit of $2.6 million compared to a loss of $1.3 million recorded in the year-ago quarter.

Capital Expenditure & Financial Position

In the third quarter of 2022, PTEN spent $126.35 million on capital programs (compared with $34.26 million in the third quarter of 2021). As of Sep 30, 2022, the company had $42.7 million of cash and cash equivalents and $852.9 million as long-term debt.


For the fourth quarter, Patterson-UTI anticipates incremental pricing gains with activity levels slightly higher than the third quarter, with fourth-quarter revenue estimates of $61 million.

Based on contracts currently in place, Patterson-UTI expects its fourth-quarter 2022 rig count to average 81 rigs under term contracts. As the onshore driller foresees a ramp-up in drilling activity, it expects the third-quarter rig count to be 132 rigs, on average.

For 2022, PTEN anticipates its adjusted EBITDA to be more than $650 million, an update from the earlier guidance of $600 million. The company also increased its Capex forecast from $390 million to $425 million.


How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended upward during the past month.

The consensus estimate has shifted 22.96% due to these changes.

VGM Scores

At this time, Patterson-UTI has a great Growth Score of A, though it is lagging a lot on the Momentum Score front 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.


Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Patterson-UTI has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.

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