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Helmerich & Payne (HP) Down 5% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Helmerich & Payne (HP - Free Report) . Shares have lost about 5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Helmerich & Payne due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Helmerich & Payne Q1 Earnings Beat Estimates
Helmerich & Payne reported first-quarter fiscal 2024 adjusted net income of 97 cents per share, which beat the Zacks Consensus Estimate of 68 cents. The outperformance signifies a significant improvement in the company's International Solutions unit’s performance. However, the bottom line was lower than the year-ago quarter’s reported figure of $1.11. This was primarily due to the poor performance of the company's North America Solutions and Offshore Gulf of Mexico units.
Operating revenues of $659.6 million outpaced the Zacks Consensus Estimate of $658 million. Sales from the International Solutions unit totaled $54.8 million, which beat the consensus mark of $51 million. However, the figure decreased 3.6% from the year-ago quarter’s level.
In good news for investors, Helmerich & Payne is using the excess cash from a supportive environment to reward investors with dividends and buybacks. HP’s board of directors declared a quarterly cash dividend of 25 cents per share to its common shareholders of record as of Feb 13. The payout will be made on Feb 27. In addition to the regular dividend, HP declared a supplemental cash dividend of 17 cents per share.
During the fiscal first quarter, the company distributed around $90 million to shareholders, comprising $25 million in base dividends, $17 million in supplemental dividends and $47 million in share repurchases.
Segmental Performance
North America Solutions: Operating revenues of $594.3 million were down 5.2% year over year on lower activity levels, with the average number of active rigs at 149. The figure beat our projection of $575.2 million.
Operating profit totaled $144.5 million compared with $145.3 million in the prior-year period. The figure beat our estimate of $128.5 million. The decline in drilling activity levels during the quarter can be attributed to this underperformance.
Offshore Gulf of Mexico: Revenues of $25.5 million decreased 27.6% from the year-ago quarter’s level of $35.2 million. The figure also missed our projection of $28.9 million.
Operating profit totaled $3.1 million, down 53.7% from that recorded in the prior-year period. The figure also missed our estimate of $4.7 million.
International Solutions: Sales in this segment decreased 0.1% from the year-ago quarter’s level of $54.8 million. The figure beat our projection of $53.2 million.
Operating profit totaled $5.4 million compared with $1.6 million in the prior-year quarter. The figure also exceeded our projection of a loss of $5 million.
Financial Position
In the reported quarter, HP spent $136.4 million on capital programs. As of Dec 31, 2023, the company had $214.1 million in cash and cash equivalents, while the long-term debt totaled $545.3 million (debt-to-capitalization of 16.5%).
Guidance
For the second quarter of fiscal 2024, Helmerich & Payne expects operating gross margin to be in the range of $255-$275 million and $1-$3 million for North America Solutions and Offshore Gulf of Mexico, respectively. The company expects to exit the quarter with around 154-159 contracted rigs.
HP anticipates International Solutions' direct margins to be between $1 million and $3 million, exclusive of any foreign exchange gains or losses. The projected sequential decline is due to one less rig operating in Argentina and Colombia, and the costs associated with preparing rigs for export. The company also expects offshore Gulf of Mexico direct margins to be in the band of $4-$7 million.
Helmerich & Payne estimates capital outlay between $450 million and $500 million for 2024. The company projects depreciation and amortization expenses of $390 million, and research and development expenses of $30 million. General and administrative expenses are anticipated to be $230 million. Cash taxes are anticipated to be in the $150-$200 million range.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
The consensus estimate has shifted 16.18% due to these changes.
VGM Scores
At this time, Helmerich & Payne has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. Following the exact same course, 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 trending upward for the stock, and the magnitude of these revisions looks promising. 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) Down 5% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Helmerich & Payne (HP - Free Report) . Shares have lost about 5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Helmerich & Payne due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Helmerich & Payne Q1 Earnings Beat Estimates
Helmerich & Payne reported first-quarter fiscal 2024 adjusted net income of 97 cents per share, which beat the Zacks Consensus Estimate of 68 cents. The outperformance signifies a significant improvement in the company's International Solutions unit’s performance. However, the bottom line was lower than the year-ago quarter’s reported figure of $1.11. This was primarily due to the poor performance of the company's North America Solutions and Offshore Gulf of Mexico units.
Operating revenues of $659.6 million outpaced the Zacks Consensus Estimate of $658 million. Sales from the International Solutions unit totaled $54.8 million, which beat the consensus mark of $51 million. However, the figure decreased 3.6% from the year-ago quarter’s level.
In good news for investors, Helmerich & Payne is using the excess cash from a supportive environment to reward investors with dividends and buybacks. HP’s board of directors declared a quarterly cash dividend of 25 cents per share to its common shareholders of record as of Feb 13. The payout will be made on Feb 27. In addition to the regular dividend, HP declared a supplemental cash dividend of 17 cents per share.
During the fiscal first quarter, the company distributed around $90 million to shareholders, comprising $25 million in base dividends, $17 million in supplemental dividends and $47 million in share repurchases.
Segmental Performance
North America Solutions: Operating revenues of $594.3 million were down 5.2% year over year on lower activity levels, with the average number of active rigs at 149. The figure beat our projection of $575.2 million.
Operating profit totaled $144.5 million compared with $145.3 million in the prior-year period. The figure beat our estimate of $128.5 million. The decline in drilling activity levels during the quarter can be attributed to this underperformance.
Offshore Gulf of Mexico: Revenues of $25.5 million decreased 27.6% from the year-ago quarter’s level of $35.2 million. The figure also missed our projection of $28.9 million.
Operating profit totaled $3.1 million, down 53.7% from that recorded in the prior-year period. The figure also missed our estimate of $4.7 million.
International Solutions: Sales in this segment decreased 0.1% from the year-ago quarter’s level of $54.8 million. The figure beat our projection of $53.2 million.
Operating profit totaled $5.4 million compared with $1.6 million in the prior-year quarter. The figure also exceeded our projection of a loss of $5 million.
Financial Position
In the reported quarter, HP spent $136.4 million on capital programs. As of Dec 31, 2023, the company had $214.1 million in cash and cash equivalents, while the long-term debt totaled $545.3 million (debt-to-capitalization of 16.5%).
Guidance
For the second quarter of fiscal 2024, Helmerich & Payne expects operating gross margin to be in the range of $255-$275 million and $1-$3 million for North America Solutions and Offshore Gulf of Mexico, respectively. The company expects to exit the quarter with around 154-159 contracted rigs.
HP anticipates International Solutions' direct margins to be between $1 million and $3 million, exclusive of any foreign exchange gains or losses. The projected sequential decline is due to one less rig operating in Argentina and Colombia, and the costs associated with preparing rigs for export. The company also expects offshore Gulf of Mexico direct margins to be in the band of $4-$7 million.
Helmerich & Payne estimates capital outlay between $450 million and $500 million for 2024. The company projects depreciation and amortization expenses of $390 million, and research and development expenses of $30 million. General and administrative expenses are anticipated to be $230 million. Cash taxes are anticipated to be in the $150-$200 million range.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
The consensus estimate has shifted 16.18% due to these changes.
VGM Scores
At this time, Helmerich & Payne has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. Following the exact same course, 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 trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Helmerich & Payne has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.