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Helmerich & Payne Hit 52-Week High - Analyst Blog
Helmerich & Payne Inc.
) reached a 52-week high of $79.56.15 on Nov 18. In fact, the
Tulsa, Oklahoma-based contract drilling services provider has
seen its stock price climb some 20% during the past six months.
Despite this price appreciation, we remain optimistic about the firm's near-term prospects, supported by its superior and diversified drilling fleet, continued strong operating performance led by an efficient management team, and an investor-friendly financial policy.
These factors are reflected in Helmerich & Payne's Zacks Rank #2 (Buy), implying that it is expected to outperform the broader U.S. equity market over the next one to three months.
Why the Bullishness?
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 has surpassed earnings estimates in each of the last 6 quarters, specializes in shallow to deep drilling in oil and gas-producing basins of the U.S. and in drilling for oil and gas in international locations.
We believe that Helmerich & Payne's technologically-advanced FlexRigs are the key to its success, helping to increase its count of active rigs and maintain relatively strong daily-rate margins even during times of market uncertainty. The company's proprietary FlexRig design makes the rigs 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.
Helmerich & Payne - which counts Nabors Industries Ltd. ( NBR ) as one of its major competitors - recently approved a raise in its quarterly cash dividend to 50 cents per share ($2.00 per share annualized), representing an increase of more than 200% over the previous payout. The significant dividend hike not only highlights the company's commitment to create value for shareholders but also underlines Helmerich & Payne's strong cash generation capabilities.
Another positive in the Helmerich & Payne story is the quality of its client base, which mostly includes well-capitalized oil majors or large independents.
Other Stocks to Consider
In addition to Helmerich & Payne, one can look at Matador Resources Co. ( MTDR ) and SM Energy Co. ( SM ) as good buying opportunities. These U.S. upstream energy operators, which sport a Zacks Rank #1 (Strong Buy) have solid secular growth stories with the potential to rise significantly from the current levels.
HELMERICH&PAYNE (HP): Free Stock Analysis Report
MATADOR RESOURC (MTDR): Free Stock Analysis Report
NABORS IND (NBR): Free Stock Analysis Report
SM ENERGY CO (SM): Free Stock Analysis Report
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