Shares of Precision Drilling (PDS) have gained 0.7% over the past four weeks to close the last trading session at $53.47, but there could still be a solid upside left in the stock if short-term price targets of Wall Street analysts are any indication. Going by the price targets, the mean estimate of $71.06 indicates a potential upside of 32.9%.The mean estimate comprises eight short-term price targets with a standard deviation of $9.08. While the lowest estimate of $55.76 indicates a 4.3% increase from the ...

Group 1 - The Conservative Income Portfolio targets high-value stocks with significant margins of safety and aims to reduce volatility through well-priced options [1] - The Enhanced Equity Income Solutions Portfolio is designed to generate yields of 7-9% while minimizing volatility [1] - Precision Drilling (TSX: PD:CA) has underperformed, lagging behind the S&P 7 by 21% since the initial coverage [1] Group 2 - Trapping Value offers Covered Calls and Preferred Stock Trader focuses on Fixed Income, with the Covered Calls Portfolio aimed at lower volatility income investing and capital preservation [2] - The fixed income portfolio emphasizes purchasing securities with high income potential and significant undervaluation compared to peers [2] Group 3 - Trapping Value consists of a team of analysts with over 40 years of combined experience in generating options income while prioritizing capital preservation [3] - The investing group operates the Conservative Income Portfolio in collaboration with Preferred Stock Trader, featuring two income-generating portfolios and a bond ladder [3]

Group 1 - Precision Drilling (PDS) closed at $53.58, with a 7.9% gain over the past four weeks, and a mean price target of $70.3 indicating a 31.2% upside potential [1] - The average price targets from analysts range from a low of $51.70 to a high of $87.60, with a standard deviation of $10.04, suggesting variability in estimates [2] - Analysts show strong agreement on PDS's ability to report better earnings, with a positive trend in earnings estimate revisions indicating potential upside [4][11] Group 2 - The Zacks Consensus Estimate for PDS has increased by 20.8% over the past month, with no negative revisions, reflecting growing optimism about the company's earnings prospects [12] - PDS holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimates [13] - While consensus price targets may not be reliable for predicting exact gains, they can provide a directional guide for price movement [14]

Financial Data and Key Metrics Changes - Adjusted EBITDA for Q2 2025 was $108 million, exceeding expectations, driven by strong drilling activity in Canada and improved activity in the U.S. [4][5] - Revenue decreased by 5% year-over-year to $407 million, while net earnings were $60 million or $1.21 per share, marking the twelfth consecutive quarter of positive earnings [5][11] - Funds from operations were $104 million, and cash provided by operations was $147 million [5][11] Business Line Data and Key Metrics Changes - In the U.S., drilling activity averaged 33 rigs in Q2, an increase of three rigs from the previous quarter, with operating days up 13% [6][7] - Daily operating margins in the U.S. were $9,026, an increase of $666 from Q1, exceeding guidance [6] - In Canada, drilling activity averaged 50 rigs, with daily operating margins of $15,306, up $883 from Q2 2024 [8] - The Completion and Production Services segment saw adjusted EBITDA of $10 million, down 18% year-over-year due to a 23% decrease in well service hours [9] Market Data and Key Metrics Changes - Internationally, drilling activity averaged seven rigs, with average day rates increasing by 4% year-over-year to $53,129 [8] - The overall market for oil and gas has seen increased prices, with rig counts stable or up in key basins like Haynesville and Marcellus [11] Company Strategy and Development Direction - The company plans to increase its capital expenditures for 2025 from $200 million to $240 million, focusing on sustaining infrastructure and upgrades [9][12] - Precision Drilling aims to reduce debt by $700 million between 2022 and 2027, having already reduced $525 million [13] - The company is focusing on maximizing free cash flow and has implemented cost reduction plans to manage expenses effectively [30] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about customer demand for gas-directed drilling, with expectations of increased rig activity in the U.S. [14][15] - The outlook for the remainder of 2025 has improved significantly, with strong customer demand for rig upgrades and term contracts [14][15] - Management noted that while macro uncertainties persist, the company is well-positioned to capitalize on market opportunities [14][15] Other Important Information - The company has a strong liquidity position of approximately $530 million, with a net debt to trailing twelve-month EBITDA ratio of 1.3 times [11] - The company is committed to reducing its debt and returning capital to shareholders through share repurchases [12][13] Q&A Session Summary Question: Growth in the U.S. Market - Management noted that the growth in gas-based work is primarily driven by private companies, with expectations to increase rig counts to 40-45 over time [38][40] Question: Canadian Market Dynamics - Management discussed the oversupply in the double rig segment and the need for consolidation among service providers to improve pricing discipline [42][45] Question: Contract Durations and Upgrades - Management clarified that most rig upgrades do not require long-term contracts to recoup costs, with many upgrades expected to generate returns within six months to a year [52][54] Question: Future Rig Capabilities - Management indicated that upgraded rigs will reach peak capabilities, allowing for efficient drilling of longer laterals in key basins [70][73] Question: Customer Interest in Electrification - There is currently limited interest from Canadian operators in electrifying service rigs, although there is some interest in high-line power drilling rigs [81] Question: Breakdown of Rig Upgrades - The majority of the 22 rig upgrades are targeted in the Haynesville, Marcellus, Montney, and Canadian heavy oil basins [86]

Financial Highlights - Precision Drilling anticipates a robust 2025 free cash flow yield potential of 25%[10, 11] - Analyst estimates for 2025 free cash flow are $226 million, against an equity market cap of $921 million[12] - The company aims to reduce total debt by at least $100 million in 2025[19, 23] - The long-term debt reduction target is increased to $700 million from 2022-2027, with $452 million already paid as of March 31, 2025[19, 23] - The company is on track to achieve a Net Debt to Adjusted EBITDA ratio of less than 10x[23] Operational Performance - Precision Drilling is the 1 land driller in Canada with 98 highly desirable rigs and a top land driller in the US with 104 rigs (66 Super Spec)[9] - The company is also the 1 well service provider in Canada with 153 rigs[9] - Canadian day rate margins have increased by 67% over the last 3 years[51] - US day rate margins have increased by over 60% in the last 3 years[66] - In Canada, Precision's Super Triples & Super Singles are nearly fully utilized[23] Strategic Priorities - Maximize free cash flow and enhance shareholder returns are key strategic priorities for 2025[18] - The company plans to allocate 35-45% of free cash flow to share repurchases in 2025, moving towards 50% of free cash flow for direct shareholder returns[19] - Grow revenue in existing service lines through disciplined capital deployment, strict cost management, and opportunistic tuck-in acquisitions[19, 20]

Precision Drilling (PDS) came out with quarterly earnings of $0.77 per share, beating the Zacks Consensus Estimate of a loss of $0.02 per share. This compares to earnings of $1.05 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of +3,950.00%. A quarter ago, it was expected that this oilfield services company would post earnings of $1.57 per share when it actually produced earnings of $1.53, delivering a surprise of -2.55%.Over th ...

Core Viewpoint - The market anticipates a year-over-year decline in earnings for Precision Drilling due to lower revenues, with a focus on how actual results compare to estimates [1][3]. Earnings Expectations - Precision Drilling is expected to report a quarterly loss of $0.02 per share, reflecting a significant year-over-year change of -101.9% [3]. - Revenues are projected to be $290.53 million, which is a decrease of 7.4% from the same quarter last year [3]. Estimate Revisions - The consensus EPS estimate has been revised 16.67% lower in the last 30 days, indicating a reassessment by analysts [4]. - The Most Accurate Estimate aligns with the Zacks Consensus Estimate, resulting in an Earnings ESP of 0% [12]. Earnings Surprise Prediction - A positive Earnings ESP is a strong predictor of an earnings beat, especially when combined with a Zacks Rank of 1, 2, or 3 [10]. - Precision Drilling currently holds a Zacks Rank of 3, making it challenging to predict an earnings beat conclusively [12][13]. Historical Performance - In the last reported quarter, Precision Drilling was expected to post earnings of $1.57 per share but delivered $1.53, resulting in a surprise of -2.55% [14]. - Over the past four quarters, the company has beaten consensus EPS estimates two times [15]. Market Reaction - The stock may rise if earnings exceed expectations, while a miss could lead to a decline [2]. - Other factors beyond earnings results can also influence stock movement, making it essential to consider various elements before making investment decisions [16][18].

Company Overview - Precision Drilling Corporation is a leading provider of safe and environmentally responsible services to the energy industry, offering access to an extensive fleet of Super Series drilling rigs [4] - The company has commercialized an industry-leading digital technology portfolio known as Alpha™, which utilizes advanced automation software and analytics to deliver efficient, predictable, and repeatable results for energy customers [4] - Precision also provides well service rigs, camps, and rental equipment, supported by a comprehensive mix of technical support services and skilled personnel [4] Upcoming Financial Results - Precision intends to release its 2025 second quarter results after the market closes on Tuesday, July 29, 2025 [1] - A conference call is scheduled for 11:00 a.m. MT (1:00 p.m. ET) on Wednesday, July 30, 2025, to discuss the results [1] - Participants can register for the conference call to receive a dial-in number and unique PIN for questions [1] Webcast and Replay - The conference call will also be webcast, and a replay will be available on Precision's website for 12 months [2]

Financial Highlights - Precision Drilling anticipates a free cash flow yield potential of approximately 25% in 2025[11] - Analyst estimates for 2025 free cash flow are $226 million, against an equity market cap of $937 million, resulting in an estimated FCF yield of 24%[12] - The company aims to reduce total debt by at least $100 million in 2025[19] - A long-term debt reduction target has been increased to $700 million from 2022-2027, with $452 million already paid as of March 31, 2025[23] Operational Performance - Precision Drilling is the 1 land driller in Canada with 98 highly desirable rigs and a top land driller in the US with 104 rigs (66 Super Spec)[9] - The company is also the 1 well service provider in Canada with 153 rigs[9] - Canadian day rate margins have increased by 67% over the last 3 years[51] - US day rate margins have increased by over 60% in the last 3 years[66] Strategic Priorities - Maximize free cash flow and enhance shareholder returns are key strategic priorities for 2025[18] - The company plans to allocate 35%-45% of free cash flow to share repurchases in 2025 and is moving towards 50% of free cash flow for direct shareholder returns[19] - The company is focused on growing revenue in existing service lines through disciplined capital deployment, strict cost management, and opportunistic consolidating tuck-in acquisitions[19, 20]

Industry Overview - The Zacks Oil and Gas - Drilling industry includes companies providing rigs and services for oil and natural gas exploration and development, with operations both onshore and offshore [2] - Drilling for hydrocarbons is capital-intensive and technically challenging, primarily influenced by contracting activity rather than oil or gas prices [2] - Offshore drilling companies exhibit higher volatility compared to onshore counterparts, with their share prices more closely correlated to oil and gas prices [2] Current Challenges - The industry is facing significant challenges due to contracting delays, soft gas prices, and macroeconomic uncertainty, leading to a Zacks Industry Rank of 235, placing it in the bottom 4% of 245 Zacks industries [1][7] - Earnings estimates for the industry have declined sharply, with a drop of 85.2% for 2025 and 51.7% for 2026 over the past year, indicating a negative outlook [9] - The industry has underperformed compared to the broader Zacks Oil - Energy sector and the S&P 500, with a decline of 38.6% over the past year versus a 2.1% increase in the sector and a 9.1% gain in the S&P 500 [11] Market Trends - Macroeconomic uncertainty is causing hesitation in customer decision-making, slowing the pace of tenders and contract awards, and making near-term earnings visibility difficult for drillers [3] - There are concerns about premature rig reactivation leading to oversupply, particularly in deepwater segments, which could undermine pricing power and margins [4] - Despite short-term challenges, long-term demand for deepwater drilling is expected to grow, with forecasts indicating a 40% increase in investment by 2030, supported by large undeveloped reserves and major project approvals [5] Company Highlights - **Transocean Ltd. (RIG)**: Reported contract drilling revenues of $906 million in Q1 2025, an 18.7% increase year-over-year, with a market capitalization of $2.9 billion and a projected earnings growth of 123.1% for 2025 [18] - **Patterson-UTI Energy (PTEN)**: Generated $51 million in adjusted free cash flow in Q1 2025, with a market capitalization of $2.5 billion and a dividend yield of nearly 5% [21] - **Precision Drilling Corporation (PDS)**: Canada’s largest drilling rig contractor, with a market capitalization of $687.3 million, has seen its earnings estimate for 2025 increase from $3.84 to $4.13 per share in the past 60 days [24]