What does RPC’s CEO think?
RPC’s (RES) management thinks that the oilfield services and equipment (or OFS) industry will continue to face challenges in 2016.
In RPC’s 4Q15 press release, its CEO Richard A. Hubbell commented, “The relentless decline in the price of oil thus far in January suggests that 2016 holds further distress for our industry. Customers continue to seek pricing concessions from financially stressed service companies, while at the same time requesting more service intensive completion work.”
Hubbell continued, “In addition to lower commodity prices, the prospect of reduced access to the capital markets creates uncertainty for our customers’ 2016 budgets and operational plans.”
RPC’s management on competition
Hubbell also believes that the current energy environment will have a bearing on OFS industry players. In RPC’s 4Q15 press release, he said, “While we are encouraged by industry anecdotes of other competing oilfield service companies not having the financial resources to maintain their equipment properly, the true impact of a smaller effective fleet of equipment will not be known until industry activity levels improve.”
Analysts’ targets for RPC
Wall Street analysts have varied opinions about RPC’s target prices in the next 12 months. Following the company’s 4Q15 earnings, its lowest target price is $8, and its highest is $18. Its median target price, surveyed among sell-side analysts, is ~$13.
RPC is currently trading at $13.6, implying a 5% downside at its median price. Halliburton (HAL), RPC’s peer, received a $40.4 median target price. This, relative to its current price of ~$31.4, implies a 29% upside.
RES makes up 0.01% of the iShares Core US Value ETF (IUSV), but for investors looking for exposure to the energy sector, energy makes up 11.8% of IUSV.
Next, we’ll discuss RPC’s revenue and earnings.