A month has gone by since the last earnings report for Helmerich & Payne (HP Quick QuoteHP - Free Report) . Shares have added about 1.8% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Helmerich & Payne 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.

Helmerich & Payne Reports Q1 Loss

Helmerich & Payne posted adjusted quarterly loss of a cent per share. The Zacks Consensus Estimate was of earnings of 7 cents per share. Moreover, the bottom line came against the year-ago earnings of 66 cents. This underperformance can be attributed to weakness in the U.S. Land segment.

However, operating revenues of $633.64 million topped the Zacks Consensus Estimate of $593 million owing to strong contributions from International Land and H&P Technologies segments. However, the top line decreased 12.1% from the year-ago level of $721 million.

Segmental Performance

U.S. Land: During the quarter, operating revenues of $530.7 million were down 14.05% year over year as revenue days fell 18.8% to 17,273.

Rig utilization dropped 63% from the prior-year’s 67%. The segment’s operating loss came in at $309.1 million against the year-earlier profit of $102 million. Moreover, the average rig margin per day dipped 4.7% from the prior-year quarter to $10,759. However, rig revenue per day improved in the quarter under review.

Offshore: Revenues of $33 million were marginally down from the year-ago quarter’s $34.6 million as revenue days declined 15.4% to 457. Rig utilization plummeted 63% from the prior-year’s 75%. Moreover, higher average rig expenses per day and increased direct operating expenses resulted in the segment’s operating loss of $3.3 million against a profit of $4.5 million in the prior-year quarter.

Although daily average rig revenues surged 34.2% from the year-ago figure, rig expense per day climbed 85%. Moreover, the segment recorded a negative average rig margin per day in the quarter under review.

International Land: Operations generated revenues of $51.3 million, up from $50.8 million in the prior-year quarter on improved average rig revenue per day.

While rig utilization decreased to 53%, average rig revenue increased from the year-ago quarter to $31,706.  The average rig margin per day decreased 9.08% from the year-ago quarter to $10,784. The segment’s bottom line induced an operating loss of $152.5 million versus a profit of $7.9 million a year ago.

H&P Technologies: In late 2018, Helmerich & Payne had announced the creation of its new segment H&P Technologies to highlight the addition of the then-acquired rig technology companies to its portfolio, namely MagVar and Motive Drilling along with Angus Jamieson Consulting, an industry leader in wellbore positioning.

During the reported quarter, the segment recognized revenues worth $17.7 million, up 20.2% from the year-ago figure. However, the company’s increasing asset impairment charge and depreciation, led to the segment’s wider operating loss of $33.6 million from the year-ago loss of $3.8 million.

Capital Expenditure & Balance Sheet

In the reported quarter, Helmerich & Payne spent $48.3 million on capital programs. As of Mar 31, 2020, the company had $336.08 million in cash and cash equivalents while long-term debt was $479.3 million (debt-to-capitalization of 12.2%).

Guidance

This Tulsa, OK-based company anticipates operating gross margins in the U.S. land segment to be between $90 and $105 million inclusive of approximately $45 million of contract early termination compensation in the fiscal third quarter.

Coming to the offshore segment, Helmerich & Payne envisions operating gross margins within $4-6 million for the fiscal third quarter and operating income of $2 million.

Additionally, international land operating gross margins are forecast to be in a negative $4-$6 million range for the current quarter.

Revenues from HP Technologies are predicted in the $4-$7 million range.

For the current fiscal year, Helmerich & Payne estimates capital outlay within $185-$205 million.Helmerich & Payne Inc. recently released first-quarter fiscal 2020 results wherein it delivered a comprehensive earnings beat on the back of higher offshore rig margin and increase in revenues from the H&P Technologies segment.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -128.24% due to these changes.

VGM Scores

At this time, Helmerich & Payne has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Helmerich & Payne has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.