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Helmerich & Payne Down 33% in a Year: Should You Buy, Hold or Sell?
HPHelmerich & Payne(HP) ZACKS·2025-03-11 14:10

Company Overview - Helmerich & Payne (HP) has experienced a challenging year, with shares down 33%, underperforming the energy sector's 1.5% increase and the S&P 500's 11% growth, currently priced at 25.42,nearits52−weeklowof25.42, near its 52-week low of 23.80 [1] - HP is a leading player in land and offshore drilling, boasting the youngest and most efficient rig fleet, with advanced FlexRigs that enhance operational efficiency [2] Strengths - The company has a strong global presence, recently delivering eight FlexRigs to Saudi Arabia and acquiring KCA Deutag, which adds a 5.5billioncontractbacklog[2]−HPmaintainsdisciplinedcapitalmanagement,with5.5 billion contract backlog [2] - HP maintains disciplined capital management, with 526 million in cash and an undrawn 950millioncreditfacility,alongsideplanstorepaya950 million credit facility, alongside plans to repay a 400 million loan within 18 months [2] - The firm holds a 35% market share in the super-spec rig space, particularly in the Permian Basin, with industry-leading margins [2] Weaknesses - HP faces near-term challenges, particularly with the integration of KCA Deutag leading to higher costs, and expected international margins for the second quarter of fiscal 2025 ranging from a loss of 7milliontoalossof7 million to a loss of 3 million [3] - The North America Solutions segment, HP's largest, has seen revenues fall to 598millioninthefirstquarteroffiscal2025,withfurthermargindeclinesanticipated[3]−IncreaseddebtfromtheKCAacquisitionaddsfinancialrisk,withanadditional598 million in the first quarter of fiscal 2025, with further margin declines anticipated [3] - Increased debt from the KCA acquisition adds financial risk, with an additional 75 million in interest expenses this year, and HP remains vulnerable to oil price fluctuations and potential decreases in drilling demand due to industry consolidation [3] Industry Position - HP is part of the Zacks Oil and Gas – Drilling industry, which ranks in the bottom 9% of 247 industries, indicating potential underperformance [4] - The fiscal 2025 earnings per share estimate for HP has declined by 7% in the past 30 days, from 3.13to3.13 to 2.93 [4] - Despite solid assets and a strong balance sheet, near-term headwinds and industry pressures have led to a Zacks Rank 3 (Hold) for HP [4]