RPC versus peers and industry
RPC, Inc. (RES) is a US-based OFS (oilfield services and equipment) company. On May 6, 2016, RES’s stock was trading at $13.70, which is ~5% lower than its share price one year previously.
At the same time, the VanEck Vectors Oil Services ETF (OIH), an ETF that tracks an index of 25 OFS companies, has declined by 22%. Precision Drilling (PDS), RES’s smaller market cap peer, has declined by 36% during the same period. In fact, the entire OFS industry has been negatively affected by the energy price crash since June 2014.
What does RES’s share price movement tell us?
RPC’s share price has been steady in the stock market, in contrast to many of its peers in the OFS industry, which tumbled in the past year. RES’s revenues and cash flow for the past four quarters suffered in the face of weak demand for OFS products and services, although its bottom-line showed some resilience in some of the quarters in the past one year.
Notably, in July 2015, RES suspended its quarterly dividend. RES’s share price has gathered some steam since its one-year low in October 2015, recovering 60%. RES makes up 3.5% of the SPDR S&P Oil & Gas Equipment & Services ETF (XES).
On May 6, RES’s stock was trading at a 3% discount to its 50-day MA (moving average) and 11.8% above its 200-day MA.
Moving averages show a smoother trend in the stock’s price movement. Remember that a 50-day MA is a short-term MA, whereas a 200-day MA shows a long-term trend. RES’s share price has gone ahead of the long-run MA since mid-February. Its share price, which also went ahead of its short-run MA in February 2016, has retraced back in the first week of May. RES’s share is thus showing strength in a long-run trend but is currently facing some short-run headwinds.
In this series, we’ll discuss RES’s top-line growth and bottom-line growth, its balance sheet, and its valuation multiples. Let’s start off with the management’s comments.