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Helmerich & Payne (HP)
:HP
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Helmerich & Payne
(NYSE:HP)
Rating:70Outperform
Price Target:
$21.00
▲(16.73%Upside)
Positive Factors
International Growth
The merger with KCA accelerates international growth strategy and provides scale in the Middle East.
Share Price Potential
Expected share price return 22.0%.
Strategic Expansion
HP expanded its global footprint and it is now a top Middle East driller, important strategic decisions to secure the company's longevity.
Negative Factors
Earnings and Guidance
Guidance for the June quarter has qoq declines in all segments with implied exit rates suggesting the September quarter could be below the June quarter.
Financial Performance
HP underperformed the OIH by 650bps after a poor cash flow quarter and downside guidance.
Market Activity
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. SPDR S&P 500 ETF (SPY)
Market Cap
$1.80B
Dividend Yield5.52%
Average Volume (3M)2.32M
Price to Earnings (P/E)8.3
Beta (1Y)0.91
Revenue Growth12.23%
EPS Growth-37.06%
CountryUS
Employees7,000
SectorEnergy
Sector Strength54
IndustryOil & Gas Drilling
Share Statistics
EPS (TTM)0.02
Shares Outstanding99,416,610
10 Day Avg. Volume2,558,521
30 Day Avg. Volume2,319,046
Financial Highlights & Ratios
PEG Ratio-7.07
Price to Book (P/B)1.42
Price to Sales (P/S)0.00
P/FCF Ratio-101.35
Enterprise Value/Market Cap2.35
Enterprise Value/Revenue0.37
Enterprise Value/Gross Profit6.14
Enterprise Value/Ebitda1.19
Forecast
1Y Price Target
$23.25Price Target Upside29.24% Upside
Rating ConsensusHold
Number of Analyst Covering8
Helmerich & Payne Business Overview & Revenue Model
Company DescriptionHelmerich & Payne, Inc. (HP) is a leading provider of drilling solutions and technologies primarily serving the oil and gas industry. Established in 1920 and headquartered in Tulsa, Oklahoma, the company operates in the sectors of contract drilling and provides a range of services including land drilling, offshore drilling, and international drilling operations. HP is renowned for its advanced drilling rigs and innovative technologies that enhance the efficiency and safety of drilling operations.
How the Company Makes MoneyHelmerich & Payne generates revenue primarily through its contract drilling services. The company earns money by leasing its fleet of technologically advanced drilling rigs to oil and gas exploration and production companies. HP's revenue streams are categorized into U.S. Land, Offshore, and International Land operations. In the U.S. Land segment, which is the largest contributor to its revenue, HP provides high-performance rigs and related services under long-term contracts. The Offshore segment involves drilling operations in the Gulf of Mexico, while the International Land segment covers operations in South America, the Middle East, and other regions. HP's earnings are influenced by factors such as the global demand for oil and gas, rig utilization rates, and day rates charged for its drilling services. The company also invests in research and development to enhance its technological capabilities, which helps in securing new contracts and maintaining competitive pricing.
Helmerich & Payne Earnings Call Summary
Earnings Call Date:May 07, 2025
(Q2-2025)
| % Change Since: -4.05%|
Next Earnings Date:Jul 23, 2025
Earnings Call Sentiment Neutral
The earnings call reflects a mixed sentiment. The acquisition of KCA Deutag and the steady performance of the North America and Offshore segments highlight positive developments. However, challenges in the International Solutions segment, particularly in Saudi Arabia, and the impact of softer oil prices on the rig count introduce significant concerns.Q2-2025 Updates
Positive Updates
Successful KCAD Acquisition
The acquisition of KCA Deutag has positioned H&P as a global leader with the largest active rig count in the industry, enhancing capabilities for future expansion into international markets.
Strong North America Solutions Segment
The North America Solutions segment maintained a steady rig count and realized margins better than expected, with over 50% of customers preferring performance-based contracts.
Offshore Solutions Segment Performance
The offshore solutions segment generated $26 million in direct margins, with a current backlog of $2.5 billion, signaling strong and steady cash flows.
Financial Position and Cash Flow
Despite significant one-time costs, the company maintained strong liquidity with cash and short-term investments of $196 million and plans to repay $175 million of a $400 million term loan by year-end.
Negative Updates
Challenges in International Solutions Segment
The International Solutions segment faced challenges with start-up delays in Saudi operations and rig suspensions impacting margins, expected to be between $25 million and $35 million in the next quarter.
Impact of Softer Oil Prices
Softer oil prices are expected to lower the industry rig count in North America, with anticipated reductions in contracted rigs and potential pricing pressure.
Saudi Rig Suspensions
The Saudi operations faced rig suspensions with no clear timeline for reactivation, impacting the International Solutions segment's performance.
Company Guidance
During the fiscal second quarter of 2025 earnings call, H&P provided detailed guidance and metrics on their performance and future outlook. The company reported quarterly revenues of just over $1 billion, with total direct operating costs of $702 million and general and administrative expenses of approximately $81 million. The North America Solutions segment averaged 149 contracted rigs, resulting in revenues of $600 million and a direct margin of $266 million. The International Solutions segment ended the quarter with 76 rigs working and generated a direct margin of $27 million, while the Offshore Solutions segment produced $26 million in direct margins. Looking ahead to the third quarter, H&P expects North American Solutions to average 143 to 149 contracted rigs, with direct margins between $235 million and $260 million. The International Solutions segment is projected to have a direct margin of $25 million to $35 million, with an average of 85 to 91 contracted rigs. The Offshore Solutions segment is expected to generate a direct margin between $22 million and $29 million. For the full fiscal year 2025, capital expenditures are estimated to be between $360 million and $395 million, with cash taxes ranging from $190 million to $240 million.Helmerich & Payne Financial Statement Overview
Summary
Helmerich & Payne exhibits strong revenue growth and maintains a stable balance sheet with low leverage. However, there are challenges with declining EBIT margins and free cash flow, indicating potential operational efficiency issues.Income Statement
Helmerich & Payne has demonstrated strong financial performance with a notable revenue growth rate of 11.87% TTM (Trailing-Twelve-Months) and improving net profit margins from previous years. The gross profit margin stands at 22.39% TTM, reflecting efficient cost management. However, the decline in EBIT margin from 19.55% to 11.35% indicates potential pressures on operating efficiency.78
Positive
Balance Sheet
The company maintains a stable balance sheet with a low debt-to-equity ratio of 0.002 TTM, highlighting minimal leverage and financial risk. The equity ratio of 42.14% suggests a solid equity base. However, the return on equity has decreased to 7.23% TTM, indicating a less efficient use of equity compared to previous periods.72
Positive
Cash Flow
Cash flow analysis reveals a significant decline in free cash flow growth rate, from a robust 131.36% in 2023 to a negative trajectory in recent TTM. The operating cash flow to net income ratio remains strong at 2.63 TTM, indicating healthy cash generation relative to earnings. However, the free cash flow to net income ratio dropped, reflecting challenges in maintaining free cash flow levels.65
Positive
| Breakdown | |||||
| TTM | Sep 2024 | Sep 2023 | Sep 2022 | Sep 2021 | Sep 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 3.08B | 2.76B | 2.87B | 2.06B | 1.22B | 1.77B | Gross Profit |
| 690.73M | 729.04M | 775.01M | 224.55M | -158.90M | 101.48M | EBIT |
| 350.00M | 451.90M | 561.89M | 22.59M | -348.22M | -85.76M | EBITDA |
| 886.25M | 907.46M | 992.98M | 425.76M | 2.50M | -131.64M | Net Income Common Stockholders |
| 220.59M | 344.17M | 434.10M | 5.45M | -337.46M | -496.39M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 195.58M | 510.26M | 350.77M | 349.23M | 1.12B | 577.22M | Total Assets |
| 7.24B | 5.78B | 4.38B | 4.36B | 5.03B | 4.83B | Total Debt |
| 6.75M | 1.86B | 599.95M | 554.99M | 1.03B | 480.73M | Net Debt |
| -168.01M | 1.64B | 342.78M | 322.86M | 107.95M | -7.16M | Total Liabilities |
| 4.19B | 2.86B | 1.61B | 1.59B | 2.12B | 1.51B | Stockholders Equity |
| 3.05B | 2.92B | 2.77B | 2.77B | 2.91B | 3.32B |
| Cash Flow | Free Cash Flow | ||||
| 74.95M | 189.59M | 438.22M | -38.63M | 54.29M | 398.09M | Operating Cash Flow |
| 580.55M | 684.66M | 833.68M | 233.91M | 136.44M | 538.88M | Investing Cash Flow |
| -2.05B | -458.75M | -322.58M | -167.31M | -161.99M | -87.89M | Financing Cash Flow |
| 1.45B | 986.51M | -463.87M | -734.30M | 425.52M | -297.22M |
Helmerich & Payne Technical Analysis
Neutral
17.99
Price Trends
18.39
Negative
22.86
Negative
27.69
Negative
Market Momentum
-0.23
Negative
53.64
Neutral
77.35
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 17.99 is above the 20-day moving average (MA) of 16.55, below the 50-day MA of 18.39, and below the 200-day MA of 27.69, indicating a neutral trend. The MACD of -0.23 indicates Negative momentum. The RSI at 53.64 is Neutral, neither overbought nor oversold. The STOCH value of 77.35 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 (58)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $3.17B | 10.68 | 14.66% | ― | 30.82% | -62.91% | |
76 Outperform | $1.70B | 5.26 | 12.75% | ― | -15.60% | 32.51% | |
70 Outperform | $1.80B | 8.25 | 7.57% | 5.52% | 12.23% | -37.06% | |
65 Neutral | $2.72B | ― | -6.65% | ― | 24.47% | -55.45% | |
58 Neutral | $7.43B | 3.43 | -4.49% | 10.08% | 0.81% | -49.42% | |
53 Neutral | $2.38B | ― | -24.93% | 5.04% | 5.82% | -481.39% | |
50 Neutral | $539.91M | ― | -44.00% | ― | -0.94% | -19.18% |
* Energy Sector Average
Performance Comparison
HP
Helmerich & Payne
17.99
-13.38
-42.65%
NBR
Nabors Industries
33.60
-27.29
-44.82%
PTEN
Patterson-UTI
6.35
-3.07
-32.59%
RIG
Transocean
3.21
-1.96
-37.91%
VAL
Valaris
45.60
-26.55
-36.80%
SDRL
Seadrill Limited
28.47
-18.91
-39.91%
Helmerich & Payne Corporate Events
M&A TransactionsBusiness Operations and Strategy
Helmerich & Payne Faces New Rig Contract Suspensions
Negative
Jun 11, 2025
On June 10, 2025, Helmerich & Payne announced its executives’ participation in the J.P. Morgan 2025 Energy, Power and Renewables Conference in New York City. The company also provided a market update revealing contract suspensions for nine additional rigs in Saudi Arabia, totaling 26 suspensions. Despite these challenges, H&P remains financially robust and optimistic about long-term synergies from its KCA Deutag acquisition, maintaining strong operations in North America and other markets.
The most recent analyst rating on (HP) stock is a Hold with a $50.00 price target. To see the full list of analyst forecasts on Helmerich & Payne stock, see the HP Stock Forecast page.
Dividends
Helmerich & Payne Declares Quarterly Cash Dividend
Positive
Jun 3, 2025
On June 3, 2025, Helmerich & Payne‘s Board of Directors declared a quarterly cash dividend of $0.25 per share on its common stock. This dividend will be payable on August 29, 2025, to stockholders recorded by August 15, 2025, reflecting the company’s ongoing commitment to returning value to its shareholders.
The most recent analyst rating on (HP) stock is a Hold with a $50.00 price target. To see the full list of analyst forecasts on Helmerich & Payne stock, see the HP Stock Forecast page.
Private Placements and FinancingM&A Transactions
Helmerich & Payne Completes Acquisition of KCA Deutag
Neutral
May 15, 2025
On January 16, 2025, Helmerich & Payne, Inc. completed its acquisition of KCA Deutag International Limited for approximately $2.0 billion. This acquisition, funded through a combination of senior notes, term loans, and cash, is expected to enhance H&P’s market position by integrating KCA Deutag’s operations, although the pro forma financial statements indicate that actual results may vary from projections.
The most recent analyst rating on (HP) stock is a Hold with a $50.00 price target. To see the full list of analyst forecasts on Helmerich & Payne stock, see the HP Stock Forecast page.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.