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What's Looming on Helmerich & Payne (HP) in Q1 Earnings?

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Helmerich & Payne, Inc. (HP - Free Report) is set to release first-quarter fiscal 2020 results on Tuesday Feb 4, before the opening bell.

The current Zacks Consensus Estimate for the to-be-reported quarter is pegged at earnings of 7 cents per share on expected revenues of $603.16 million. There has been no change in estimates for the bottom line over the past seven days.

Let’s delve into the factors that might have impacted the company’s performance in the December quarter.

Factors to Impact Q1 Results

Due to minimal activity, this oilfield service provider’s U.S. Land segment, accounting for about 83% of the top line, is likely to have posted lower year-over-year revenues for the fiscal first quarter. The Zacks Consensus Estimate for operating revenues from U.S. Land, the company’s largest segment, is pegged at $500 million, indicating a decline from $624 million reported in the year-ago quarter.

However, Helmerich & Payne’s technologically-advanced FlexRigs is much in demand and commands strong daily rate margins. This, in turn, bodes well for the segmental profits in the upcoming quarterly results. The Zacks Consensus Estimate for average rig margin per day at the U.S. Land unit stands at $10,350, suggesting growth from $9,820 reported in the prior year.

Even though we anticipate that the U.S. Land segment’s revenues might have declined in the quarter to be reported, Helmerich & Payne’s high-in-demand technologically-advanced FlexRigs is likely to have boosted the segment’s operating income. The Zacks Consensus Estimate for the U.S. Land Operating segment is pegged at $87 million, implying an 8.75% increase from $80 million reported in the year-earlier quarter.

While the company is expected to have gained from a solid year-over-year contribution from the U.S Land unit, weaker sales from Offshore and International Land segments might have dented its overall results.

The Zacks Consensus Estimate for International Land and Offshore segments’ revenues in the fiscal first quarter is pegged at $45.19 million and $34.81 million, respectively, indicating a decrease from $66 million and $36.91 million each reported a year ago. Declining rig margins in International Land and Offshore units are a persistent concern and might partly affect the company’s overall earnings figures in the impending quarterly release.

What Does Our Model Say?

The proven Zacks model does not conclusively predict an earnings beat for Helmerich & Payne this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. But that’s not the case here.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Helmerich & Payne has an Earnings ESP of -8.77%.

Zacks Rank: Helmerich & Payne carries a Zacks Rank #3.

The above combination acts as a spoiler as it leaves surprise prediction inconclusive.

Highlights of Q4 Earnings & Surprise History

In the last reported quarter, Helmerich & Payne delivered a comprehensive earnings beat on the back of an improved contribution from the H&P Technologies business, which benefited from a change in contingent liability accounting.

The company posted adjusted quarterly earnings of 39 cents a share, surpassing the Zacks Consensus Estimate of 24. The bottom line also improved from the year-ago figure of 19 cents.

However, operating revenues of $649.05 million lagged the Zacks Consensus Estimate of $661 million and also decreased 6.8% from the year-ago level of $696.83 million. This underperformance can be attributed to soft contributions from the U.S. Land and International land segments.

As far as the earnings surprise track is concerned, this Tulsa, OK-based company’s bottom line surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average being 41.19%. This is depicted in the graph below:

Helmerich & Payne, Inc. Price and EPS Surprise

Helmerich & Payne, Inc. Price and EPS Surprise

Helmerich & Payne, Inc. price-eps-surprise | Helmerich & Payne, Inc. Quote

Stocks to Consider

Here are some stocks worth considering from the energy space, which per our model have the right combination of elements to beat on earnings this reporting cycle:

NuStar Energy L.P. (NS - Free Report) has an Earnings ESP of +1.32% and a Zacks Rank #2. The company is slated to report fourth-quarter earnings on Feb 5.

Chevron Corporation (CVX - Free Report) has an Earnings ESP of +0.80% and is Zacks #2 Ranked. The company is slated to announce fourth-quarter 2019 earnings on Jan 31.

Plains All American Pipeline, L.P. (PAA - Free Report) has an Earnings ESP of +11.57% and a Zacks Rank of 3. The partnership is slated to release fourth-quarter earnings on Feb 4. You can see the complete list of today’s Zacks #1 Rank stocks here.

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