Patterson-UTI Energy versus peers and industry
Patterson-UTI Energy (PTEN) owns and operates land-based drilling rigs and pressure pumping equipment in the United States. It’s also one of the leading contract drillers. On March 24, 2016, PTEN was trading at $16.93, about 10% lower than its price a year ago.
The VanEck Vectors Oil Services ETF (OIH), an ETF-tracking index of 25 OFS (oilfield services) companies, has fallen 21% in the past one year. Precision Drilling (PDS), PTEN’s smaller market-cap peer, has fallen 33% during the same period. Forum Energy Technologies (FET) and Helmerich & Payne (HP), PTEN’s peers in the OFS industry, fell 35% and 14.7%, respectively, in the past one year. WTI (West Texas Intermediate) crude oil prices declined 17% during this period. PTEN is 2.4% of OIH.
What does Patterson-UTI Energy’s share price movement tell us?
Patterson-UTI Energy’s share price has been trending downward since early May 2015. PTEN’s quarterly revenues in the past four quarters persistently stayed weak, while its cash flow improved in fiscal 4Q15 over the previous quarter. In the third week of January 2016, PTEN’s share price reached its one-year low. Since then, it has recovered 47%.
Patterson-UTI Energy’s moving averages
On March 24, 2016, Patterson-UTI Energy’s share price was at a 14% premium to its 50-day moving average (or DMA). It was also trading 7.7% above its 200-DMA. PTEN is 0.17% of the iShares Core S&P Mid-Cap ETF (IJH).
Moving averages exhibit a smoother trend following a stock’s price movement. A 50-DMA is a short-term MA (moving average), while a 200-DMA shows a long-term trend. PTEN’s short-run MA has stayed below its long-run MA since August 2015. PTEN’s share price went above its short-run MA in February and has been trading above its long-run MA since the beginning of March. This indicates that PTEN’s share price is gathering some momentum. This can also reflect the Market’s expectation of a crude oil price recovery. Crude oil prices have rallied 44% since February 10, 2016.
In this series, we’ll look at Patterson-UTI Energy’s top-line and bottom-line growth, free cash flow, balance sheet, dividend, and valuation multiples. We’ll start in the next part by looking at what management is saying.