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Why Is Patterson-UTI (PTEN) Down 7% Since Last Earnings Report?
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It has been about a month since the last earnings report for Patterson-UTI (PTEN - Free Report) . Shares have lost about 7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Patterson-UTI 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.
Patterson UTI Q1 Earnings & Sales Beat Estimates
Patterson-UTI Energyreported a first-quarter 2023 adjusted net profit of 46 cents per share, which beat the Zacks Consensus Estimate of 36 cents. This outperformance can be attributed to better-than-expected operating income in Contract Drilling and Pressure Pumping segments. Adjusted net profit improved from the year-ago quarter's loss of 13 cents per share.
Total revenues of $791.8 million outperformed the Zacks Consensus Estimate of $756 million. The top line also improved 55.4% on a year-over-year basis.
Patterson-UTI will pay its quarterly dividend of 8 cents per share on Jun 15, 2023, to shareholders of record as of Jun 1, 2023.
Segmental Performances
Contract Drilling: Revenues totaled $419 million, up 63.3% from the prior-year quarter’s figure of $256.6 million. This was due to continued renewal of drilling rig contracts at unchanged rates. Operating profit came in at $100.3 million against a loss of $3.2 million in the first quarter of 2022. The figure also beat the Zacks Consensus Estimate of $83 million.
Pressure Pumping: Revenues of $293.3 million rose about 54.7% from the year-ago quarter’s figure of $189.6 million due to better pricing. Operating profit was $44.4 million compared to a loss of $6.4 million in the first quarter of 2022. The figure beat the Zacks Consensus Estimate of $43.16 million. The surge in profit can be attributed to better pricing.
Moreover, the segment posted an operating profit of $58.6 million compared to a loss of $41.4 million in the fourth quarter of 2021. The profit is attributable to high utilization of active spreads in the reported quarter, minimal holiday-related downtime and better pricing.
Directional Drilling: Revenues totaled $56.3 million, up 30% from the prior-year quarter’s figure of $43.3 million. Operating profit was $2.1 million compared with $1.8 million in the corresponding quarter of 2022. The figure missed the Zacks Consensus Estimate of $2.3 million. The year-over-year improvement can be attributed to higher activity and more favorable pricing.
Other Operations: Revenues were $23.2 million, 17.7% higher than the year-ago quarter’s figure of $19.8 million. This was mainly due to improved activity levels. The unit also reported a profit of $835,000 compared with $741,000 in the year-ago quarter.
Capital Expenditure & Financial Position
In the reported quarter, PTEN spent $117.6 million on capital programs compared with $94.8 million in the prior-year period. As of Mar 31, 2023, the company had $157.2 million worth cash and cash equivalents, and $822.2 million as long-term debt.
Outlook
For the second quarter of 2023, Patterson-UTI projects approximately 79 rigs to be in operation under term contracts in the United States.
The company expects to continue utilizing its Tier-1, super-spec rigs at a high level. However, it foresees a decrease of two to three rigs in the average rig count (of 131 rigs) for the second quarter, as the focus shifts toward oil activity instead of natural gas.
PTEN plans to reduce its capex estimate from $550 million to $510 million, Contract Drilling capex prediction from 320 million to $290 million and Pressure Pumping capex forecast to roughly $150 million for 2023.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
VGM Scores
Currently, Patterson-UTI has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. 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. Notably, Patterson-UTI has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Patterson-UTI (PTEN) Down 7% Since Last Earnings Report?
It has been about a month since the last earnings report for Patterson-UTI (PTEN - Free Report) . Shares have lost about 7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Patterson-UTI 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.
Patterson UTI Q1 Earnings & Sales Beat Estimates
Patterson-UTI Energy reported a first-quarter 2023 adjusted net profit of 46 cents per share, which beat the Zacks Consensus Estimate of 36 cents. This outperformance can be attributed to better-than-expected operating income in Contract Drilling and Pressure Pumping segments. Adjusted net profit improved from the year-ago quarter's loss of 13 cents per share.
Total revenues of $791.8 million outperformed the Zacks Consensus Estimate of $756 million. The top line also improved 55.4% on a year-over-year basis.
Patterson-UTI will pay its quarterly dividend of 8 cents per share on Jun 15, 2023, to shareholders of record as of Jun 1, 2023.
Segmental Performances
Contract Drilling: Revenues totaled $419 million, up 63.3% from the prior-year quarter’s figure of $256.6 million. This was due to continued renewal of drilling rig contracts at unchanged rates. Operating profit came in at $100.3 million against a loss of $3.2 million in the first quarter of 2022. The figure also beat the Zacks Consensus Estimate of $83 million.
Pressure Pumping: Revenues of $293.3 million rose about 54.7% from the year-ago quarter’s figure of $189.6 million due to better pricing. Operating profit was $44.4 million compared to a loss of $6.4 million in the first quarter of 2022. The figure beat the Zacks Consensus Estimate of $43.16 million. The surge in profit can be attributed to better pricing.
Moreover, the segment posted an operating profit of $58.6 million compared to a loss of $41.4 million in the fourth quarter of 2021. The profit is attributable to high utilization of active spreads in the reported quarter, minimal holiday-related downtime and better pricing.
Directional Drilling: Revenues totaled $56.3 million, up 30% from the prior-year quarter’s figure of $43.3 million. Operating profit was $2.1 million compared with $1.8 million in the corresponding quarter of 2022. The figure missed the Zacks Consensus Estimate of $2.3 million. The year-over-year improvement can be attributed to higher activity and more favorable pricing.
Other Operations: Revenues were $23.2 million, 17.7% higher than the year-ago quarter’s figure of $19.8 million. This was mainly due to improved activity levels. The unit also reported a profit of $835,000 compared with $741,000 in the year-ago quarter.
Capital Expenditure & Financial Position
In the reported quarter, PTEN spent $117.6 million on capital programs compared with $94.8 million in the prior-year period. As of Mar 31, 2023, the company had $157.2 million worth cash and cash equivalents, and $822.2 million as long-term debt.
Outlook
For the second quarter of 2023, Patterson-UTI projects approximately 79 rigs to be in operation under term contracts in the United States.
The company expects to continue utilizing its Tier-1, super-spec rigs at a high level. However, it foresees a decrease of two to three rigs in the average rig count (of 131 rigs) for the second quarter, as the focus shifts toward oil activity instead of natural gas.
PTEN plans to reduce its capex estimate from $550 million to $510 million, Contract Drilling capex prediction from 320 million to $290 million and Pressure Pumping capex forecast to roughly $150 million for 2023.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
VGM Scores
Currently, Patterson-UTI has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. 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. Notably, Patterson-UTI has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.