Precision Drilling Corp. (PDS) has been one of the stronger names in the energy space, trading near its recent 52-week high in spite of sector volatility. With a Q1 earnings surprise of 15% and bullish growth projection, this Zacks #1 rank stock is digging deep for momentum.
Company Description
Precisions Drilling Corp., through its subsidiaries, provides onshore well drilling and completion services in North America and internationally. The company was founded in 1951 and has a market cap of $3.94 billion.
Onshore drilling services has been one of the strongest names in the energy space over the last few months as exploration companies jack up their capital spending to take advantage of rising crude prices. That dynamic lifted Precision to strong Q1 results in late April that came in ahead of expectations.
First-Quarter Results
Revenue for the period was up 41% from last year to $525 million. Earnings also looked good, coming in at 31 cents, 15% ahead of the Zacks Consensus Estimate, where the company has an average earnings surprise of 62% over the last three quarters.
The strong results were driven by higher utilization rates, with operating rigs up to 139 from 106 in the same quarter last year.
The company is also moving aggressively to satisfy surging demand, on pace to bring a total of 12 new rigs to the market in 2011 with 11 headed to Canada and one slated for the United States.
Financial Profile
Precision will also continue to benefit from its strong financial profile, with cash and equivalents more than doubling from last year to $249 million against total debt of $781 million.
Estimates
We saw some pretty solid movement in estimates off the good quarter, with the current year adding 13% to 86 cents while the next-year estimate jumped 19% to $1.12, a bullish 31% growth projection.
Valuation
But in spite of the gains, the valuation picture still looks solid, with a forward PEG ratio of .55, well below the benchmark of 1 for value.
12-Month Chart
On the chart, PDS took flight in late September after breaking a 9-month downtrend. Look for support from the long-term trend line on any weakness, take a look below.
Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Momentum Trader Service.
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