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What's in Store for Helmerich & Payne (HP) in Q4 Earnings?

Zacks Equity Research

Helmerich & Payne, Inc. HP is set to report fourth-quarter fiscal 2019 results on Friday Nov 15, before the opening bell.

The current Zacks Consensus Estimate for the to-be-reported quarter is pegged at earnings of 25 cents on revenues of $654.2 million.

Highlights of Q3 Earnings & Surprise History:

In the last reported quarter, Helmerich & Payne delivered comprehensive earnings beat on the back of better-than-expected revenues from the U.S. Land business, the company’s largest segment.

The company posted adjusted quarterly earnings of 40 cents a share, surpassing the Zacks Consensus Estimate of 35 cents and also reversing the year-ago adjusted loss of a penny.

Moreover, operating revenues of $688 million outpaced the Zacks Consensus Estimate of $683 million and increased 6% from the year-ago level as well.

As far as earnings surprises are concerned, this oil and gas well drilling company’s beat streak sustained through all the trailing four quarters, the average being 26.96%. This is depicted in the graph below:

Helmerich & Payne, Inc. Price and EPS Surprise

Helmerich & Payne, Inc. Price and EPS Surprise

Helmerich & Payne, Inc. price-eps-surprise | Helmerich & Payne, Inc. Quote

Let’s delve into the factors that might have influenced the company’s performance in the to-be-reported quarter.

Factors at Play

Due to minimal activity, this oilfield service provider’s U.S. Land segment, accounting for about 83% of revenues, is likely to have posted lower year-over-year revenues in the fiscal fourth quarter. The Zacks Consensus Estimate for operating revenues from U.S. Land, the company’s largest segment, is pegged at $541 million, indicating a decline from $587 million reported in the year-ago quarter.

However, Helmerich & Payne’s technologically-advanced FlexRigs is much in demand and command strong daily rate margins. This, in turn, bodes well for the segmental profits in the upcoming quarterly results. The Zacks Consensus Estimate for average rig margin per day at the U.S. Land unit stands at $10,710, suggesting growth from $10,340 reported in the prior year.

Even though we anticipate that the U.S. Land segment’s revenues might have declined in the quarter to be reported, Helmerich & Payne’s high-in-demand technologically-advanced FlexRigs is likely to have boosted the segment’s operating income. The Zacks Consensus Estimate for the U.S. Land Operating segment is pegged at $72 million, implying a 10.7% increase from $65 million reported in the year-earlier quarter.

While the company is expected to have gained from solid year-over-year contribution from the U.S Land unit, weaker sales from Offshore and International Land segments might have dented its overall results.

The Zacks Consensus Estimate for International Land and Offshore segments’ revenues in the fiscal fourth quarter is pegged at $49.16 million and $37.98 million, respectively, indicating a decrease from $59 million and $38.48 million, each, reported a year ago. Declining rig margins in International Land and Offshore units remain a concern and might partly affect the company’s overall earnings figures in the impending quarterly release.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Helmerich & Payne this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of a positive suprise. But this is not the case here.

Earnings ESP: Helmerich & Payne has an Earnings ESP of +6.12%, representing the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Helmerich & Payne currently has a Zacks Rank #4 (Sell).

Stocks to Consider

Here are some companies worth considering from the same space. Per our model, these have the right combination of elements to surpass estimates in the upcoming quarterly reports:

Canopy Growth Corporation CGC has an Earnings ESP of +11.53% and a Zacks Rank #3. This Canada-based cannabis company is scheduled to release earnings on Nov 14. You can see the complete list of today’s Zacks #1 Rank stocks here.

Ascendis Pharma A/S ASND has an Earnings ESP of +8.03% and a Zacks Rank #2. This Denmark-based biopharmaceutical company is scheduled to release earnings on Nov 18.

Bank of Montreal BMO has an Earnings ESP of +1.52% and is a #2 Ranked stock. This bank not only offers financial products to all clients but also provides custom-made knowledge-based solutions to add value to their financial affairs. It is scheduled to release earnings on Dec 3.

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