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Helmerich & Payne (HP)
NYSE:HP
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Helmerich & Payne
(NYSE:HP)
73Outperform
Positive Factors
International Growth
The merger with KCA accelerates international growth strategy and provides scale in the Middle East.
Shareholder Returns
H&P plans to continue allocating ~$100 million to its annual base dividend of $1/shr, indicating a well-executed shareholder return framework.
Strategic Expansion
The announced acquisition of KCA Deutag is expected to significantly expand the company’s operations in the Middle East, positioning H&P as one of the largest rig providers in the region.
Negative Factors
Earnings Performance
Earnings miss and muted FY2Q outlook reflect higher than expected startup costs for new contracts in Saudi.
Financial Uncertainty
The drop in KCA EBITDA remains uncertain.
Saudi Market Challenges
The market may be under-appreciating the depth/duration of conventional land drilling market activity pressure in Saudi, now HP's biggest market outside of the US.
Helmerich & Payne (HP) vs. S&P 500 (SPY)
Market Cap
$2.01B
Dividend Yield6.62%
Average Volume (3M)1.83M
Price to Earnings (P/E)6.7
Beta (1Y)0.91
Revenue Growth-2.59%
EPS Growth-27.85%
CountryUS
Employees7,000
SectorEnergy
Sector Strength46
IndustryOil & Gas Drilling
Share Statistics
EPS (TTM)3.02
Shares Outstanding99,378,610
10 Day Avg. Volume1,527,539
30 Day Avg. Volume1,825,719
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.00
Price to Cash Flow (P/CF)0.00
P/FCF Ratio0.00
Enterprise Value/Market Cap2.17
Enterprise Value/RevenueN/A
Enterprise Value/Gross Profit5.98
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$29.80Price Target Upside47.31% Upside
Rating ConsensusHold
Number of Analyst Covering12
Helmerich & Payne Business Overview & Revenue Model
Company DescriptionHelmerich & Payne, Inc., together with its subsidiaries, provides drilling services and solutions for exploration and production companies. The company operates through three segments: North America Solutions, Offshore Gulf of Mexico, and International Solutions. The North America Solutions segment drills primarily in Colorado, Louisiana, Montana, Nevada, New Mexico, North Dakota, Ohio, Oklahoma, Pennsylvania, Texas, Utah, West Virginia, and Wyoming. It also focuses on developing, promoting, and commercializing technologies designed to enhance the drilling operations, as well as wellbore quality and placement. The Offshore Gulf of Mexico segment has drilling operations in Louisiana and in U.S. federal waters in the Gulf of Mexico. The International Solutions segment conducts drilling operations in Argentina, Bahrain, Colombia, and the United Arab Emirates. As of September 30, 2021, the company operated a fleet of 236 land rigs in North America; 30 international land rigs; and 7 offshore platform rigs. It also owns, develops, and operates commercial real estate properties. The company's real estate investments include a shopping center comprising approximately 390,000 leasable square feet; and approximately 176 acres of undeveloped real estate located in Tulsa, Oklahoma. Helmerich & Payne, Inc. was founded in 1920 and is headquartered in Tulsa, Oklahoma.
How the Company Makes MoneyHelmerich & Payne generates revenue primarily through its contract drilling services. The company's revenue model is based on providing land and offshore drilling services to oil and gas exploration and production companies. Key revenue streams include day rates charged for the use of its drilling rigs, which are determined by the length and complexity of drilling contracts, equipment utilization rates, and the specific technical specifications required by clients. Additionally, HP benefits from long-term contracts and partnerships with major oil and gas companies, which provide a stable income stream. The company's earnings are also influenced by factors such as global oil prices, demand for energy resources, and technological advancements in drilling efficiency.
Helmerich & Payne Financial Statement Overview
Summary
Overall, Helmerich & Payne demonstrates sound financial health and operational efficiency. The company has successfully improved its profitability and maintains a strong balance sheet with no debt. The cash flow position is solid, although there is scope for enhanced free cash flow growth. The company is well-positioned to manage market fluctuations and potential growth opportunities.Income Statement
Helmerich & Payne shows a strong financial performance with improving margins. The TTM gross profit margin is 44.5%, and the net profit margin is 11.0%. Revenue growth has been inconsistent, with a recent decline of 4.0% from the previous year. However, the company has consistently improved its EBIT and EBITDA margins, currently at 15.0% and 30.4% respectively, indicating operational efficiency improvements.75
Positive
Balance Sheet
The balance sheet reflects a robust financial position with a debt-to-equity ratio of 0.0 in the latest TTM period, indicating no reliance on debt financing. The equity ratio is 50.7%, showcasing a healthy balance of equity financing. Return on equity is solid at 10.3%, suggesting effective management of shareholder investments.82
Very Positive
Cash Flow
Cash flow analysis shows strong operational cash generation with an operating cash flow to net income ratio of 2.2 in the TTM period. The free cash flow to net income ratio is 0.7, indicating decent cash conversion. However, free cash flow growth is moderate at 7.1%, suggesting room for improvement in capital efficiency.78
Positive
| Breakdown | ||||
| Sep 2024 | Sep 2023 | Sep 2022 | Sep 2021 | Sep 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 2.76B | 2.87B | 2.06B | 1.22B | 1.77B | Gross Profit |
| 729.04M | 775.01M | 224.55M | -158.90M | 101.48M | EBIT |
| 451.90M | 561.89M | 22.59M | -348.22M | -85.76M | EBITDA |
| 849.27M | 992.98M | 425.76M | 2.50M | -131.64M | Net Income Common Stockholders |
| 344.17M | 434.10M | 5.45M | -337.46M | -496.39M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 510.26M | 350.77M | 349.23M | 1.12B | 577.22M | Total Assets |
| 5.78B | 4.38B | 4.36B | 5.03B | 4.83B | Total Debt |
| 1.86B | 599.95M | 554.99M | 1.03B | 480.73M | Net Debt |
| 1.64B | 342.78M | 322.86M | 107.95M | -7.16M | Total Liabilities |
| 2.86B | 1.61B | 1.59B | 2.12B | 1.51B | Stockholders Equity |
| 2.92B | 2.77B | 2.77B | 2.91B | 3.32B |
| Cash Flow | Free Cash Flow | |||
| 189.59M | 438.22M | -38.63M | 54.29M | 398.09M | Operating Cash Flow |
| 684.66M | 833.68M | 233.91M | 136.44M | 538.88M | Investing Cash Flow |
| -458.75M | -322.58M | -167.31M | -161.99M | -87.89M | Financing Cash Flow |
| 986.51M | -463.87M | -734.30M | 425.52M | -297.22M |
Helmerich & Payne Technical Analysis
Neutral
20.23
Price Trends
23.28
Negative
27.48
Negative
30.58
Negative
Market Momentum
-1.11
Negative
44.55
Neutral
43.33
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HP, the sentiment is Neutral. The current price of 20.23 is above the 20-day moving average (MA) of 19.77, below the 50-day MA of 23.28, and below the 200-day MA of 30.58, indicating a neutral trend. The MACD of -1.11 indicates Negative momentum. The RSI at 44.55 is Neutral, neither overbought nor oversold. The STOCH value of 43.33 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for HP.
Helmerich & Payne Peers Comparison
Overall Rating
UnderperformOutperform
Sector (56)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
73 Outperform | $2.56B | 7.00 | 14.66% | ― | 30.82% | -62.91% | |
73 Outperform | $2.01B | 6.69 | 10.50% | 6.62% | -2.59% | -27.85% | |
66 Neutral | $1.39B | 3.53 | 15.12% | ― | -7.79% | 57.21% | |
60 Neutral | $2.09B | ― | -6.65% | ― | 24.47% | -55.45% | |
56 Neutral | $7.00B | 3.42 | -4.37% | 5.89% | -0.12% | -48.35% | |
53 Neutral | $2.33B | ― | -24.93% | 5.31% | 5.82% | -481.39% | |
43 Neutral | $451.12M | ― | -44.38% | ― | -0.94% | -19.18% |
* Energy Sector Average
Performance Comparison
HP
Helmerich & Payne
20.23
-16.72
-45.25%
NBR
Nabors Industries
28.74
-45.88
-61.48%
PTEN
Patterson-UTI
6.03
-4.56
-43.06%
RIG
Transocean
2.37
-3.30
-58.20%
VAL
Valaris
35.96
-34.84
-49.21%
SDRL
Seadrill Limited
22.50
-28.09
-55.52%
Helmerich & Payne Earnings Call Summary
Earnings Call Date:Feb 05, 2025
(Q1-2025)
| % Change Since: -38.47%|
Next Earnings Date:May 07, 2025
Earnings Call Sentiment Neutral
The earnings call reflects a balanced sentiment with significant achievements like the KCA Deutag acquisition and expansion into the Middle East, offset by temporary international challenges and decreased quarterly financial metrics.Q1-2025 Updates
Positive Updates
Successful KCA Deutag Acquisition
Helmerich & Payne completed the acquisition of KCA Deutag, positioning the company as a global leader in onshore drilling with enhanced scale and geographic diversity. The acquisition is expected to provide a robust operational mix and attractive financial returns, with a backlog of approximately $5.5 billion.
North America Solutions Market Leadership
The company continues to lead the North American market with a 35% market share of super spec FlexRig fleet and a strong presence in the Permian basin. This segment has maintained healthy margins despite industry rig count declines.
Expansion into the Middle East
Eight FlexRigs were exported to Saudi Arabia to drill in unconventional natural gas plays, marking significant progress in international growth. The company is also seeing strong customer interest and potential growth opportunities in Oman and Kuwait.
Negative Updates
Temporary International Headwinds
The company faces short-term challenges in international operations due to rig suspensions related to the KCA acquisition and startup costs in Saudi Arabia. These issues are expected to cause a temporary decline in revenue contributions.
Decreased Revenue and Net Income
Quarterly revenues decreased to $677 million from $693 million in the previous quarter, and net income per diluted share dropped to $0.54 from $0.76, impacted by transaction costs and changes in equity investment values.
Lower Guidance for International Solutions
International Solutions segment's financial results were below expectations due to slower ramp-up in Saudi Arabia. The segment is projected to experience a margin loss in the upcoming quarter.
Company Guidance
During the first quarter of fiscal year 2025, Helmerich & Payne, Inc. reported revenues of $677 million, a slight decrease from $693 million in the previous quarter, primarily due to reduced revenues in its North American Solutions segment. The company's net income per diluted share was $0.54, down from $0.76 in the preceding quarter, impacted by select items including transaction and integration costs. The firm completed the exportation of eight FlexRigs to Saudi Arabia and closed the acquisition of KCA Deutag, positioning itself as a global leader in onshore drilling. Despite facing temporary headwinds such as rig suspensions and startup costs in Saudi Arabia, the company anticipates maintaining healthy direct margins in North America Solutions in the second quarter, projecting between $240 million and $260 million. The acquisition is expected to enhance long-term growth, with KCA's legacy backlog valued at approximately $5.5 billion. Helmerich & Payne, Inc. aims to generate at least $1 billion in direct margin on an annual basis in North America Solutions, while capital expenditures for fiscal 2025 are projected between $360 million and $395 million.Helmerich & Payne Corporate Events
M&A TransactionsBusiness Operations and Strategy
Helmerich & Payne Expands Globally with Strategic Acquisition
Positive
Jan 16, 2025
On January 16, 2025, Helmerich & Payne completed the acquisition of KCA Deutag International Limited for approximately $897 million, marking a strategic expansion in the company’s global operations, particularly enhancing its presence in the Middle East. This acquisition aims to bolster H&P’s growth strategy, diversify its operational capabilities across global markets, and strengthen its financial standing by creating a more robust revenue stream.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.