Helmerich & Payne HP has endured 12 tough months, with shares down 33%, underperforming the broader energy sector's 1.5% increase and the S&P 500’s 11% growth. At $25.42, the stock sits near its 52-week low of $23.80. However, HP has outperformed drilling peers like Transocean RIG and Nabors Industries NBR, sending mixed signals. With HP at a crossroads, should investors buy, hold, or sell?

HP, RIG, NBR 1 Year Stock Performance

Image Source: Zacks Investment Research

Strengths

HP is a dominant player in land and offshore drilling, with the youngest and most efficient rig fleet. Its advanced FlexRigs offer faster, safer and more cost-effective operations, securing strong utilization and pricing. The company has expanded globally, recently delivering eight FlexRigs to Saudi Arabia and acquiring KCA Deutag, adding a $5.5 billion contract backlog. HP’s disciplined capital management is another advantage, with $526 million in cash, an undrawn $950 million credit facility and plans to repay a $400 million loan within 18 months. The firm also maintains a 35% market share in the super-spec rig space, particularly in the Permian Basin, with industry-leading margins.

Weaknesses

Despite strengths, HP faces near-term challenges. The KCA Deutag integration has led to higher costs, with second-quarter fiscal 2025 international margins expected to range from a loss of $7 million to a loss of $3 million. Meanwhile, North America Solutions, HP’s largest segment, is struggling. Its revenues fell to $598 million in first-quarter fiscal 2025, and margins are expected to drop further in the fiscal second quarter. Increased debt from the KCA acquisition raises financial risk, with $75 million in added interest expenses this year. HP also remains vulnerable to oil price swings, and industry consolidation among major oil producers could dampen drilling demand, putting pressure on contracts.

Verdict

HP is a component of the Zacks Oil and Gas – Drilling industry, which ranks in the bottom 9% of 247 industries, signaling potential underperformance. Additionally, HP’s fiscal 2025 earnings per share estimate has declined 7% in the past 30 days, from $3.13 to $2.93. While HP has solid assets and a strong balance sheet, near-term headwinds and industry pressures make it a Zacks Rank #3 (Hold) for now. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Transocean Ltd. (RIG) : Free Stock Analysis Report

Nabors Industries Ltd. (NBR) : Free Stock Analysis Report

Helmerich & Payne, Inc. (HP) : Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research