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Helmerich & Payne (HP) Q1 Earnings: Is a Beat in Store?

Contract drilling services provider Helmerich & Payne Inc.HP is set to release fiscal first-quarter 2017 results before the opening bell on Thursday, Jan 26.

In the preceding three-month period, the Tulsa, OK-based company reported narrower-than-expected loss owing to strong performances by all its segments.

Helmerich & Payne's earnings surprise history is a mixed one. The company missed estimates in two of the last four quarters. Let's see how things are shaping up for this announcement.

Why a Likely Positive Surprise?

Our proven model shows that Helmerich & Payne is likely to beat on earnings because it has the right combination of two key ingredients.

Zacks ESP:Earnings ESP , which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, stands at +10.81%. This is very meaningful and a leading indicator of a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank: Helmerich & Payne carries a Zacks Rank #2 (Buy), which combined with positive ESP makes us confident about a positive earnings beat.

Note that stocks with Zacks Ranks #1 (Strong Buy), 2 or 3 (Hold) have a significantly higher chance of beating earnings estimates.

Helmerich & Payne Inc. Price and EPS Surprise

Helmerich & Payne Inc. Price and EPS Surprise | Helmerich & Payne Inc. Quote

Conversely, the Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions.

What is Driving the Better-Than-Expected Earnings?

Helmerich & Payne is a major land and offshore drilling contractor in the western hemisphere with the youngest but the most efficient drilling fleet. The company specializes in shallow to deep drilling in oil and gas-producing basins of the U.S. It also drills for oil and gas in international locations.

The company's technologically advanced FlexRigs are the key to its success, helping it to maintain relatively strong daily-rate margins even during market uncertainty. The company's proprietary FlexRig design makes the rigs move faster than conventional ones, drill quicker and more efficiently, and allows for a safer operating environment.

As such, these are better suited to the requirements of the exploration business and hence, command higher dayrates and utilization than rigs from other land drillers. In fact, the company projected a slight improvement in average rig margin per day.

Furthermore, Helmerich & Payne's strong contract drilling backlog - currently at $1.8 billion - reflects steady demand from customers. This also offers long-term earnings and cash flow visibility.

Additionally,crude has started to advance after OPEC and non-OPEC oil producers decided to limit output of the commodity. The improvement on the crude front will likely lead exploration and production companies to increase oil production by hiring more and more rigs. In fact, oil producers have already started to gather to the crude patch. This, in turn, is likely to result in more drilling contracts for Helmerich & Payne.

Stocks to Consider

Here are some stocks from the Oils/Energy sector that you may want to consider, as our model shows that it has the right combination for an earnings beat this quarter.

W&T Offshore, Inc. WTI is expected to release fourth-quarter earnings results on Mar 14. The company has an Earnings ESP of +73.91% and a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here .

Sprague Resources LP SRLP has an Earnings ESP of +3.64% and a Zacks Rank #2. The partnership is anticipated to release fourth-quarter earnings on Mar 9.

Pioneer Natural Resources Company PXD has an Earnings ESP of +10.00% and a Zacks Rank #2. The company is likely to release fourth-quarter earnings on Feb 7.

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Helmerich & Payne Inc. (HP): Free Stock Analysis Report

Pioneer Natural Resources Co. (PXD): Free Stock Analysis Report

W&T Offshore Inc. (WTI): Free Stock Analysis Report

Sprague Resources LP (SRLP): Free Stock Analysis Report

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


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

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