Helmerich & Payne is a 'Strong Buy' - Here's Why - Analyst Blog

By
A A A

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).



HELMERICH&PAYNE (HP): Free Stock Analysis Report

LINN CO LLC (LNCO): Free Stock Analysis Report

NABORS IND (NBR): Free Stock Analysis Report

WARREN RSRCS (WRES): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: HP , LNCO , NBR , WRES

Zacks.com

Zacks.com

More from Zacks.com:

Related Videos

Tiny Homes With Big Appeal
Tiny Homes With Big Appeal          

Stocks

Referenced

Most Active by Volume

270,887,127
    $93.89 unch
225,243,115
  • $40.93 ▼ 2.74%
135,900,109
  • $47.52 ▲ 1.80%
89,467,924
  • $5.35 ▼ 1.11%
85,105,358
  • $16.95 ▼ 0.53%
80,748,539
  • $39.80 ▼ 4.21%
68,491,586
  • $3.57 ▼ 1.79%
62,097,356
  • $100.96 ▼ 0.82%
As of 9/19/2014, 04:15 PM

Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com