Precision Drilling (PD) AI Stock Analysis

• Market Cap: $929.76M
• Dividend Yield: N/A
• Average Volume (3M): 104.51K
• Price to Earnings (P/E): 8.7
• Beta (1Y): 1.27
• Revenue Growth: -1.90%
• EPS Growth: -52.33%
• Country: CA
• Employees: 5,504
• Sector: Energy
• Sector Strength: 53
• Industry: Oil & Gas Drilling
• EPS (TTM): 2.20
• Shares Outstanding: 13,644,869
• 10 Day Avg. Volume: 127,377
• 30 Day Avg. Volume: 104,514
• PEG Ratio: 0.51
• Price to Book (P/B): 1.14
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 26.58
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $92.76
• Price Target Upside: 36.13% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 7

• Rating: 73 Outperform
• Price Target: C$74.00 ▲(8.60%Upside)

Precision Drilling's strong financial performance, particularly in profitability and cash flow, is the most significant factor in its overall score. The stock's undervaluation further supports its attractiveness. However, inconsistent revenue growth and challenges highlighted in the earnings call, such as decreased U.S. drilling activity, present risks that temper the overall score.

Positive Factors

Market Position

Precision Drilling is in a strong position to benefit from increased natural gas and heavy oil drilling in Canada to fill incremental pipeline export capacity.

Operational Performance

Precision Drilling is viewed as one of the top-tier contract drillers in Canada, owing to its fleet comprising a high percentage of tier 1 rigs.

Shareholder Returns

The company increased its shareholder return target to 35-45% of free cash flow, which is forecasted to equate to $50-$80 million of potential share repurchases.

Negative Factors

Debt Management

The company plans to reduce debt by ~$100 million in 2025, indicating a need to manage financial obligations.

Financial Performance

PD reported Q4/24 results below expectations, with softer U.S. operating margins offset by stronger Canadian and International activity.

Precision Drilling Business Overview & Revenue Model

Company Description

Precision Drilling Corporation, a drilling company, provides onshore drilling, completion, and production services to exploration and production companies in the oil and natural gas and geothermal industries in North America and the Middle East. The company operates in two segments, Contract Drilling Services; and Completion and Production Services. The Contract Drilling Services segment offers onshore well drilling services to exploration and production companies in the oil and natural gas industry. This segment's services include land and turnkey drilling; and procurement and distribution of oilfield supplies, as well as manufacture and refurbishment of drilling and service rig equipment. As of December 31, 2021, it operated 227 land drilling rigs, including 109 in Canada; 105 in the United States; 6 in Kuwait; 4 in Saudi Arabia; 2 in the Kurdistan region of Iraq; and 1 in the country of Georgia. As of December 31, 2021, this segment also operated 47 AlphaTM rigs with commercial AlphaAutomation; 18 AlphaApps; 4 grid power capable rigs; and 60 natural gas or bi-fuel rigs. The Completion and Production Services segment provides service rigs for well completion, workover, abandonment, maintenance, and re-entry preparation services; wellsite accommodations; oilfield surface equipment rentals; and camp and catering services to oil and natural gas exploration and production companies. As of December 31, 2021, it operated 123 well completion and workover service rigs, including 113 in Canada and 10 in the United States; 1,900 oilfield rental items, including surface storage, small-flow wastewater treatment, power generation, and solids control equipment; 109 wellsite accommodation units; 943 drill camp beds; 822 base camp beds; and three kitchen diners in Canada. Precision Drilling Corporation was incorporated in 1951 and is headquartered in Calgary, Canada.

How the Company Makes Money

Precision Drilling makes money primarily through providing drilling and well servicing solutions to oil and gas companies. Its revenue model is based on contracts with these companies, where it offers its fleet of high-performance drilling rigs, technical expertise, and related services. The company's key revenue streams include day rates charged for drilling services, long-term contracts for rig leasing, and ancillary services such as directional drilling. Significant factors contributing to its earnings include its ability to maintain high utilization rates of its rigs, technological advancements that improve drilling efficiency, and strategic partnerships with major oil and gas companies. Additionally, market conditions such as oil prices and exploration activity levels can significantly impact its revenue.

Precision Drilling Financial Statement Overview

Summary

Precision Drilling demonstrates solid financial performance with strong cash flow metrics and moderate leverage. However, inconsistent revenue growth and moderate return on equity slightly dampen the overall financial outlook.

Income Statement

Precision Drilling shows a robust improvement in profitability over the past years. The TTM data indicates a strong gross profit margin of 51.7% and a positive net profit margin of 5.8%, highlighting efficient cost management. However, the revenue growth has been inconsistent, with a notable drop from the previous year, potentially signaling market volatility.

Balance Sheet

The company's balance sheet is moderately healthy with a debt-to-equity ratio of 0.51, indicating a relatively low leverage compared to industry norms. Return on equity stands at a modest 6.4%, reflecting moderate profitability for shareholders. The equity ratio is stable at 58.2%, suggesting a balanced capital structure.

Cash Flow

Precision Drilling exhibits strong cash flow management with a free cash flow to net income ratio of 2.36, indicating excellent cash generation relative to net earnings. Additionally, the operating cash flow to net income ratio is notably high at 4.38, underscoring efficient cash operations. The free cash flow growth is stable, although not particularly high.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	1.87B	1.90B	1.94B	1.62B	986.85M	935.75M
Gross Profit	967.86M	1.59B	733.31M	213.56M	6.38M	36.01M
EBITDA	518.37M	535.85M	657.73M	311.61M	191.19M	309.14M
Net Income	109.19M	111.19M	289.24M	-34.29M	-177.39M	-120.14M
Balance Sheet
Total Assets	2.92B	2.96B	3.02B	2.88B	2.66B	2.90B
Cash, Cash Equivalents and Short-Term Investments	28.25M	73.77M	54.18M	21.59M	40.59M	108.77M
Total Debt	869.42M	887.59M	992.19M	1.15B	1.17B	1.30B
Total Liabilities	1.22B	1.27B	1.44B	1.65B	1.44B	1.49B
Stockholders Equity	1.70B	1.68B	1.58B	1.23B	1.23B	1.41B
Cash Flow
Free Cash Flow	257.51M	265.38M	273.82M	52.85M	63.28M	164.53M
Operating Cash Flow	478.64M	482.08M	500.57M	237.10M	139.22M	226.12M
Investing Cash Flow	-180.56M	-202.99M	-214.78M	-144.41M	-56.61M	-40.52M
Financing Cash Flow	-301.93M	-261.38M	-251.97M	-113.17M	-149.91M	-145.62M

Precision Drilling Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 68.14
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:PD, the sentiment is Positive. The current price of 68.14 is above the 20-day moving average (MA) of 67.30, above the 50-day MA of 62.72, and below the 200-day MA of 75.73, indicating a neutral trend. The MACD of 1.11 indicates Positive momentum. The RSI at 58.00 is Neutral, neither overbought nor oversold. The STOCH value of 75.81 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:PD.

Precision Drilling Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
TOT	75 Outperform	C$415.56M	6.66	11.38%	3.61%	11.02%	102.23%
PD	73 Outperform	$929.76M	8.73	6.58%	―	-1.90%	-52.33%
AKT.A	73 Outperform	C$96.85M	5.16	11.11%	―	2.57%	63.53%
PHX	73 Outperform	C$374.14M	6.60	25.15%	9.72%	4.69%	-34.62%
Sector *	68 Neutral	$15.14B	9.95	6.38%	5.21%	4.16%	-67.19%
ESI	55 Neutral	C$419.27M	14.37	-1.17%	―	-2.85%	-144.20%
WRG	54 Neutral	C$77.67M	―	-2.16%	―	6.43%	35.87%

Precision Drilling Corporate Events

Precision Drilling Reports Q1 Results and Strategic Adjustments

Precision Drilling reported a slight decrease in first-quarter revenue to $496 million, attributed to reduced U.S. drilling activity despite strong performance in Canada. The company maintained positive net earnings of $35 million and announced a reduction in its 2025 capital budget to $200 million. Precision remains committed to debt repayment and share buybacks, with a strategic focus on leveraging LNG opportunities in North America.