Helmerich & Payne versus peers and industry
Helmerich & Payne (HP) is one of the leading contract drillers in the US. On March 21, HP was trading at $60.98. This is ~11% lower than its price one year previously.
The VanEck Vectors Oil Services ETF (OIH), an ETF tracking index of 25 OFS companies, has declined by 18% in the past one year. Oceaneering International (OII), HP’s smaller market cap peer, has decreased by 33% during the same period. WTI (West Texas Intermediate) crude oil price has declined by 13% during this period. HP makes up 5.5% of OIH.
What Helmerich & Payne’s share price movement tells us
Helmerich & Payne’s share price has trended down since early May 2015. HP’s quarterly revenues in the past four quarters stayed weak while its net income and cash flow improved in fiscal 1Q16 over the previous quarter. Since the third week of January, when HP’s share price reached its one-year low, it has recovered by 42%.
On March 21, Helmerich & Payne’s share price was at 17% premium to its 50-day MA (moving average). It is also trading 8% above its 200-day moving average. HP represents 0.04% of the SPDR S&P 500 ETF (SPY).
MAs exhibit smoother trends following the movement of stock prices. A 50-day MA is a short-term MA, for example, while a 200 DMA shows a long-term trend. HP’s short-run MA has stayed below its long-run MA since July 2015. HP’s share price has gone above it short-run MA in February and has been trading above its long-run MA since the beginning of March. This indicates that HP’s share price is gathering some momentum. This can also reflect the market’s expectation of crude oil price recovery. Notably, crude oil prices have rallied by 45% since February 10.
In this series, we’ll analyze Helmerich & Payne’s top-line and bottom-line growth, free cash flow, dividend, and valuation multiples. Let’s start with its management’s comments.