Yahoo Finance Helmerich & Payne (HP) Down 13.1% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Helmerich & Payne (HP). Shares have lost about 13.1% 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 catalysts.
Helmerich & Payne Q1 Earnings Beat Estimates
Helmerich & Payne reported fiscal first-quarter 2023 adjusted net income of $1.11 per share, beating the Zacks Consensus Estimate of 81 cents per share. In the year-ago period, the company had incurred a loss of 45 cents per share. The outperformance reflects a significant uptick in activity.
Meanwhile, operating revenues of $719.6 million topped the Zacks Consensus Estimate of $689 million and increased 75.6% from the year-ago level on the back of strong results from the North America Solutions segment. Precisely, sales from the unit totaled $ 627.12 million, well ahead of the consensus mark of $623 million.
In good news for investors, Helmerich & Payne is using the excess cash from a supportive environment to reward investors with dividends and buybacks. As part of this, HP’s board of directors declared a quarterly cash dividend of 25 cents per share to its common shareholders of record on Feb 14. The payout will be made on Feb 28. In addition to the regular dividend, HP declared a supplemental dividend of 23.5 cents per share.
The company also expanded its share repurchase program to include 5 million shares in calendar year 2023, up from 4 million before.
Segmental Performance
North America Solutions: During the quarter, operating revenues of $627.2 million were up 83.9% year over year on higher activity levels, with the average number of active rigs rising from 183 to 188. The steep uptick in drilling works on the back of robust oil and gas prices, together with pricing improvements, meant that the segment turned around from the previous year’s operating loss of $28.9 million to a profit of $145.3 million.
Offshore Gulf of Mexico: Revenues of $35.2 million increased 20% from the year-ago quarter as activity remained robust. Moreover, margins during the October-December period of 2022 expanded more than 10% year over year, resulting in the segment’s profit improving 23.4% (from the prior-year period) to $6.7 million.
International Solutions: In contrast to the prior quarter's operating loss of $0.8 million, this segment saw operating profitability of $1.6 million. In the absence of an $8.1 million impairment charge in the first quarter of fiscal 2023, the increase in operating income was driven by an increase in revenue days and lower expenses, primarily associated with delayed rig mobilizations.
Financial Position
In the reported quarter, Helmerich & Payne spent $96 million on capital programs. As of Dec 31, 2022, the company had $229.2 million in cash and cash equivalents, while long-term debt was $542.9 million (debt-to-capitalization of 16.1).
Guidance
This Tulsa, OK-based company anticipates direct margin in the North America Solutions segment between $280 million and $300 million in the fiscal second quarter. It expects around 183-188 contracted rigs by Mar 31, 2023.
Coming to the Offshore Gulf of Mexico segment, Helmerich & Payne envisions direct margin within $8-$10 million for the fiscal second-quarter.
Additionally, International Solutions’ direct margin is forecast to be between $7 and $10 million for the second quarter.
For the fiscal year, Helmerich & Payne still estimates capital outlay within $425-$475 million, while it hopes to shell out some $400 million as depreciation and $195 million in the form of general and administrative expenses.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
VGM Scores
Currently, Helmerich & Payne has a strong Growth Score of A, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% 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, 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, Inc. (HP) : Free Stock Analysis Report
