Helmerich & Payne's Superior Fleet Failed To Impress In Q3

We issued an updated research report on Helmerich & Payne Inc. (NYSE:HP) on Aug 11, 2016. The company is a leading drilling contractor with activities in the U.S. and overseas, supported by a superior and diversified drilling fleet, together with a healthy financial profile. Despite these positives, Helmerich & Payne reported wider-than-expected loss for the third quarter of fiscal 2016 (three months ended Jun 30, 2016).

This is reflected in Helmerich & Payne’s current Zacks Rank #3 (Hold), which implies that the stock will perform in line with the broader U.S. equity market over the next one to three months.

Helmerich & Payne is a major land and offshore drilling contractor in the western hemisphere, having the youngest and most efficient drilling fleet. The company specializes in shallow-to-deep drilling in oil and gas-producing basins of the U.S. and in drilling for oil and gas in international locations. The company remains relatively unscathed by any economic turmoil as its major work contracts are with well capitalized oil majors and larger independent oil companies.

Most importantly, the company’s technologically advanced FlexRigs hold the key to its success. These rigs help in increasing the company’s count of active rigs and maintain relatively strong daily-rate margins even during times of market uncertainty.

Furthermore, Helmerich & Payne’s strong contract drilling backlog – currently at around $2 billion – reflects steady demand from its customers apart from offering long-term earnings and cash flow visibility.

However, all those positives did not add to the company’s third-quarter report. The company reported wider-than-expected loss for the third quarter of fiscal 2016 (three months ended Jun 30, 2016), owing to dismal performances by all its segments. Quarterly loss per share from continuing operations (excluding special items) came in at 47 cents, wider than the Zacks Consensus Estimate of a loss of 42 cents. The company had reported adjusted profit of 27 cents per share in the year-ago quarter.

Stocks to Consider

Better-ranked player in the energy sector are North Atlantic Drilling Limited (NYSE:NADL) , Matador Resources Company (NYSE:MTDR) and Murphy USA Inc. (NYSE:MUSA) . All these stocks carry a Zacks Rank #1 (Strong Buy).


MURPHY USA INC (MUSA): Free Stock Analysis Report

HELMERICH&PAYNE (HP): Free Stock Analysis Report

MATADOR RESOURC (MTDR): Free Stock Analysis Report

NORTH ATL DRILG (NADL): Free Stock Analysis Report

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