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Patterson-UTI (PTEN) Up 5.3% Since Earnings Report: Can It Continue?
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About a month has gone by since the last earnings report for Patterson-UTI Energy, Inc. (PTEN - Free Report) . Shares have added about 5.3% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it 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.
Recent Earnings
Patterson-UTI Energy reported loss per share of 16 cents for third-quarter 2017, narrower than the Zacks Consensus Estimate which was pegged at a loss of 17 cents. Results were driven by strong contribution from the Pressure Pumping segment. Further, the bottom line also improved from the year-ago period loss of 58 cents per share.
The company reported quarterly revenues of $685 million in the quarter, slightly below the Zacks Consensus Estimate of $688 million. Moreover, revenues in the quarter jumped 232.5% from the prior-year figure of $206 million.
Segmental Performance
Contract Drilling: This segment’s revenues totaled $301.6 million (44% of total revenue), up 143.9% year over year.
Average revenue per operating day decreased to $20,320 from $21,870 recorded in third-quarter 2016, and average direct costs per operating day was $12,600, down from the $13,180 recorded figure in the year-ago quarter. The segment recorded operating loss of $20.4 million —narrower than the loss of $67.8 million incurred in the year-earlier quarter.
Operating days increased to 14,841 from 5,477 in the year-ago quarter. Further, the number of operational rigs increased from 61 in the prior-year quarter to 161 in the reported quarter. Patterson-UTI averaged 159 rigs in the United States and three rigs in Canada during the third quarter.
Pressure Pumping: Revenues of $362.4 million were higher by 363.7% year over year. The growth is attributed to increased activities and utilization along with better-than-expected pricing. The segment reported an operating profit of $16.8 million as against the prior-year quarter loss of $46.6 million. Pressure pumping gross margin as a percentage of revenues increased to 19.9% for the third quarter from 1.2% in the year ago quarter.
Other Operations: Revenues came in at $20.9 million, 388.6% higher than the year-ago quarter. However, the segment reported an operating loss of $6.5 million as against a profit of $228,000 in the year-ago quarter. The weaker bottom line is attributed to the increased direct operating costs, which were higher by 691.7%.
Costs & Expenses
Total costs and expenses increased by 119.4% to $723 million in the reported quarter. The increase was mainly driven by higher direct operating costs which were up 221.1% from the prior-year quarter. Depreciation costs in the reported quarter was $196.6 million, higher by 20.3%. Selling, general and administrative expenses were $27.5 million, reflecting an increase of 65.8%. Inclusion of merger and integration expenses of $9.4 million also led to increased costs in the quarter under review.
Capital Spending and Balance Sheet
During the quarter, Patterson-UTI spent approximately $143.1 million on capital programs (as against $28.7 million in third-quarter 2016).
As of Sep 30, 2017, the company had $37.8 million in cash and $598.7 million in long-term debt. The debt-to-capitalization ratio of the company is about 15.1%.
Dividend
Patterson-UTI declared a quarterly dividend on common stock of 2 cents per share, to be paid on Dec 21, to shareholders of record as of Dec 7.
Outlook
The company expects the rig count to average 160 rigs in the fourth quarter. Average rig margin per day is expected to decrease to approximately $7,300 per day in the fourth quarter as against $7,730 recorded in the third quarter. This is due to increasing average rig operating costs per day which are forecasted 3.2% higher than the current quarter.
Revenues from the pressure pumping segment are expected to increase to $390 million in the fourth quarter on the back of higher activities and better pricing. Pressure pumping gross profit as a percentage of revenues is expected to improve to about 22.5%. The other operations’ segment is estimated to generate revenues of $28 million in the fourth quarter.
Both the depreciation and selling, general /administrative costs are expected to increase in the fourth quarter. Capex for 2017 is estimated at $580 million, unchanged from the prior guidance.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There has been one revision lower for the current quarter.
At this time, the stock has a nice Growth Score of B, a grade with the same score on the momentum front. 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.
Our style scores indicate that the stock is equally suitable for growth and momentum investors.
Outlook
Estimates have been broadly trending downward for the stock and the magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.
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Patterson-UTI (PTEN) Up 5.3% Since Earnings Report: Can It Continue?
About a month has gone by since the last earnings report for Patterson-UTI Energy, Inc. (PTEN - Free Report) . Shares have added about 5.3% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it 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.
Recent Earnings
Patterson-UTI Energy reported loss per share of 16 cents for third-quarter 2017, narrower than the Zacks Consensus Estimate which was pegged at a loss of 17 cents. Results were driven by strong contribution from the Pressure Pumping segment. Further, the bottom line also improved from the year-ago period loss of 58 cents per share.
The company reported quarterly revenues of $685 million in the quarter, slightly below the Zacks Consensus Estimate of $688 million. Moreover, revenues in the quarter jumped 232.5% from the prior-year figure of $206 million.
Segmental Performance
Contract Drilling: This segment’s revenues totaled $301.6 million (44% of total revenue), up 143.9% year over year.
Average revenue per operating day decreased to $20,320 from $21,870 recorded in third-quarter 2016, and average direct costs per operating day was $12,600, down from the $13,180 recorded figure in the year-ago quarter. The segment recorded operating loss of $20.4 million —narrower than the loss of $67.8 million incurred in the year-earlier quarter.
Operating days increased to 14,841 from 5,477 in the year-ago quarter. Further, the number of operational rigs increased from 61 in the prior-year quarter to 161 in the reported quarter. Patterson-UTI averaged 159 rigs in the United States and three rigs in Canada during the third quarter.
Pressure Pumping: Revenues of $362.4 million were higher by 363.7% year over year. The growth is attributed to increased activities and utilization along with better-than-expected pricing. The segment reported an operating profit of $16.8 million as against the prior-year quarter loss of $46.6 million. Pressure pumping gross margin as a percentage of revenues increased to 19.9% for the third quarter from 1.2% in the year ago quarter.
Other Operations: Revenues came in at $20.9 million, 388.6% higher than the year-ago quarter. However, the segment reported an operating loss of $6.5 million as against a profit of $228,000 in the year-ago quarter. The weaker bottom line is attributed to the increased direct operating costs, which were higher by 691.7%.
Costs & Expenses
Total costs and expenses increased by 119.4% to $723 million in the reported quarter. The increase was mainly driven by higher direct operating costs which were up 221.1% from the prior-year quarter. Depreciation costs in the reported quarter was $196.6 million, higher by 20.3%. Selling, general and administrative expenses were $27.5 million, reflecting an increase of 65.8%. Inclusion of merger and integration expenses of $9.4 million also led to increased costs in the quarter under review.
Capital Spending and Balance Sheet
During the quarter, Patterson-UTI spent approximately $143.1 million on capital programs (as against $28.7 million in third-quarter 2016).
As of Sep 30, 2017, the company had $37.8 million in cash and $598.7 million in long-term debt. The debt-to-capitalization ratio of the company is about 15.1%.
Dividend
Patterson-UTI declared a quarterly dividend on common stock of 2 cents per share, to be paid on Dec 21, to shareholders of record as of Dec 7.
Outlook
The company expects the rig count to average 160 rigs in the fourth quarter. Average rig margin per day is expected to decrease to approximately $7,300 per day in the fourth quarter as against $7,730 recorded in the third quarter. This is due to increasing average rig operating costs per day which are forecasted 3.2% higher than the current quarter.
Revenues from the pressure pumping segment are expected to increase to $390 million in the fourth quarter on the back of higher activities and better pricing. Pressure pumping gross profit as a percentage of revenues is expected to improve to about 22.5%. The other operations’ segment is estimated to generate revenues of $28 million in the fourth quarter.
Both the depreciation and selling, general /administrative costs are expected to increase in the fourth quarter. Capex for 2017 is estimated at $580 million, unchanged from the prior guidance.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There has been one revision lower for the current quarter.
Patterson-UTI Energy, Inc. Price and Consensus
Patterson-UTI Energy, Inc. Price and Consensus | Patterson-UTI Energy, Inc. Quote
VGM Scores
At this time, the stock has a nice Growth Score of B, a grade with the same score on the momentum front. 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.
Our style scores indicate that the stock is equally suitable for growth and momentum investors.
Outlook
Estimates have been broadly trending downward for the stock and the magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.