On Feb 5, Zacks Investment Research upgraded Tulsa, Okla.-based contract drilling services provider Helmerich & Payne Inc (HP) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
Helmerich & Payne’s strong revenue, EPS and dividend growth over the past year, together with its ability to continuously expand market share, make it a great stock to own.
Detailed Analysis
Helmerich & Payne is a major land and offshore drilling contractor in the western hemisphere, having the youngest and most efficient drilling fleet. The company, which counts Nabors Industries Ltd. (NBR) as one of its major competitors, specializes in shallow to deep drilling in oil and gas-producing basins of the U.S. and international locations.
In particular, Helmerich & Payne’s technologically advanced FlexRigs are the key to its success. The company’s proprietary design makes them move faster than conventional rigs, drill quicker and more efficiently, and allows for a safer operating environment. As such, these are better suited for the new demands of the exploration business and, therefore, command higher dayrates and utilization than rigs from other land drillers.
Another positive in the Helmerich & Payne story is the quality of its client base, which mostly includes well-capitalized oil majors or large independents. Finally, with a low debt equity and payout ratio, the cash-rich company’s dividend payment is expected to be safe and reliable.
Based on its solid fundamentals, low multiples and impressive dividend growth history, analysts are predicting strong earnings growth for Helmerich & Payne over 2014 and 2015. The 2014 Zacks Consensus Estimate of $5.93 represents earnings per share growth of 5% over 2013. The Zacks Consensus Estimate for the next year is $6.38, corresponding to an 8% growth.
Other Stocks to Consider
Apart from Helmerich & Payne, investors interested in the energy industry may consider stocks like Linn Co. LLC (LNCO) and Warren Resources Inc. (WRES). Both these stocks carry a Zacks Rank #1 (Strong Buy).
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment