Helmerich & Payne Inc. (HP), the oil and gas drilling contractor, is expected to release first-quarter fiscal 2015 financial results on Thursday, Jan 29.
Last quarter, Helmerich & Payne posted a negative earnings surprise of 5.36%. However, the company posted an average positive earnings surprise of 2.44% for the past four quarters. Let’s see how things are shaping up for this announcement.
Factors to Consider this Quarter
Helmerich & Payne is a major land and offshore drilling contractor in the western hemisphere, having the youngest and most efficient drilling fleet. Moreover, the company keeps growing its fleet size.
However, the drilling business was hit hard during the October to December quarter, owing to the weak crude pricing environment. Crude price touched multi-year lows raising concerns for the likes of Helmerich & Payne as it hurt contract flows and might have even taken a toll on earnings.
Moreover, Helmerich & Payne’s offshore operations are likely to witness a decline, given the oversupply in the rig market and lower dayrates.
Earnings Whispers?
Our proven model does not conclusively show that Helmerich & Payne is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here, as you will see below.
Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at $1.56. Hence, the difference is 0.00%.
Zacks Rank: Helmerich & Payne carries a Zacks Rank #3 (Hold) which increases the predictive power of the ESP. But the company’s 0.00% ESP makes surprise prediction difficult.
We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies that investors can consider given their right combination of elements to post an earnings beat this quarter:
Spectra Energy Partner LP (SEP) has an Earnings ESP of +2.94% and a Zacks Rank #1 (Strong Buy). The partnership is expected to release earnings on Feb 4.
Valero Energy Partners LP (VLP) has an Earnings ESP of +3.33% and a Zacks Rank #2 (Buy). The company is slated to release earnings on Feb 5.
Tesoro Corporation (TSO) has an Earnings ESP of +1.40% and a Zacks Rank #2. The company is likely to release earnings on Feb 11.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment