The stock of
Helmerich & Payne Inc.
HP
has rallied 18.3% since the company’s fiscal second-quarter earnings announcement on Apr 27.
This stock performance can be attributed to the second-quarter loss being narrower than the consensus mark and revenues beating estimates.
What Did Helmerich & Payne’s Earnings Unveil?
Helmerich & Payne reported a fiscal second-quarter 2022 adjusted loss of 17 cents per share, narrower than the Zacks Consensus Estimate of 32 cents. In the year-ago period, the company had incurred a loss of 60 cents per share. The outperformance reflects a significant uptick in drilling activity.
Meanwhile, operating revenues of $467.6 million topped the Zacks Consensus Estimate of $439 million and increased 57.9% from the year-ago level on strong results from the key North America Solutions segment. Sales from the unit totaled $409 million, ahead of the consensus mark of $379 million.
Segment Performance
North America Solutions:
In the quarter, operating revenues of $408.8 million were up 63.6% year over year on higher activity levels, with the average number of active rigs rising from 105 to 164. The increase drilling activity due to the surging oil and gas prices meant that the segment posted an operating profit of $1.3 million in comparison to the $109.8 million loss in the corresponding quarter last year.
Offshore Gulf of Mexico:
Revenues of $29.1 million decreased by a mere 0.4% from the year-ago quarter’s figure of $29.3 million. However, the operating expenses during the January-March period of 2022 fell 9.5% year over year, resulting in the segment’s operating profit rising 77.2% from the prior-year period to $5.3 million.
International Solutions:
The segment’s operations generated revenues of $27.4 million, up from $14.8 million in the corresponding period of 2021 due to improved activity levels, with the average number of active rigs rising from four to seven. However, the unit reported a loss of $848,000 on account of higher expenses, narrower than the loss of $3.5 million incurred in the corresponding period a year ago.
Helmerich & Payne, Inc. Price, Consensus and EPS Surprise
Helmerich & Payne, Inc. price-consensus-eps-surprise-chart
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Helmerich & Payne, Inc. Quote
Financial Position
In the reported quarter, HP spent $60.5 million on capital programs. As of Mar 31, 2022, the company had $202.2 million in cash and cash equivalents, while the long-term debt was $541.97 million (debt-to-capitalization of 16.5%). The company repurchased around $16.6 million in stock during the quarter.
Guidance
This Tulsa, OK-based company anticipates the operating gross margins in the North America Solutions segment between $150 million and $165 million in the fiscal third quarter. It expects to exit the quarter with around 175 contracted rigs.
Coming to the Offshore Gulf of Mexico segment, Helmerich & Payne envisions the operating gross margins within $7 and $9 million for the fiscal third quarter.
Additionally, International Solutions’ operating gross margins are forecasted to be a loss between $3-$1 million in the next fiscal quarter.
For the current fiscal year, Helmerich & Payne estimates capital outlay within $250 and $270 million. The company maintains depreciation and amortization expenses of about $405 million, while research and development expenses for fiscal 2022 are expected at roughly $27 million.
However, SG&A expenses for fiscal 2022 are now anticipated to be more than $180 million.
Zacks Rank & Other Stock Picks
Helmerich & Payne currently carries a Zacks Rank #2 (Buy).
Investors interested in the energy space can look at other top-ranked options like
Earthstone Energy
ESTE
,
Ranger Oil
ROCC
and
Devon Energy
DVN
, each sporting a Zacks Rank #1 (Strong Buy). You can see
the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Earthstone’s 2022 earnings has been revised upward by about 20.4% over the past 60 days from $2.80 to $3.37 per share. Earthstone’s stock has increased 68.9% in a year.
The Zacks Consensus Estimate for ESTE’s 2022 earnings is projected at $3.37 per share, up about 169.6% from the projected year-ago earnings of $1.25.
The Zacks Consensus Estimate for Ranger Oil’s 2022 earnings is projected at $11.07 per share, which is an increase of 102% from the projected year-ago earnings of $5.48.
Ranger Oil beat the Zacks Consensus Estimate for earnings in three of the trailing four quarters, the average being around 27.3%. ROCC stock has increased 116.6% in a year.
The Zacks Consensus Estimate for Devon Energy’s 2022 earnings is projected at $8.46 per share, up about 139.6% from the projected year-ago earnings of $3.53. Devon Energy’s stock has rallied 186.2% in a year.
Devon Energy beat the Zacks Consensus Estimate for earnings in all the trailing four quarters, the average being around 13.4%. DVN is valued at around $44.7 billion.
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