It has been about a month since the last earnings report for Helmerich & Payne (HP). Shares have lost about 1.2% in that time frame, underperforming the S&P 500.
But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Helmerich & Payne due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Helmerich & Payne Q1 Earnings Miss Estimates, Revenues Beat
Helmerich & Payne reported a first-quarter fiscal 2026 adjusted net loss of 15 cents per share, which substantially missed the Zacks Consensus Estimate of adjusted net income of 12 cents. Moreover, the bottom line decreased considerably from the year-ago quarter’s reported profit of 71 cents. This was due to a weakness in the company's North America Solutions segment, along with the impact of a non-cash impairment charge of $103 million.
Operating revenues of $1 billion beat the Zacks Consensus Estimate of $986 million. Sales from Drilling Services beat the consensus mark by 4.3%. Moreover, the figure increased 50.2% from the year-ago quarter’s level. This was primarily led by stronger-than-expected margin performance in international solutions, driven by lower-than-expected reactivation costs in Saudi.
The company distributed approximately $25 million to its shareholders as part of its ongoing dividend program.
As of the end of January, HP repaid $260 million on its existing $400 million term loan. The company now expects to repay the entire term loan by the end of the third quarter of fiscal 2026.
Q1 Segmental Performance
North America Solutions: Operating revenues of $563.9 million were down 5.7% year over year, with 143 average active rigs. The top line beat our projection of $555 million.
Operating profit totaled $36.2 million compared with $152.2 million in the prior-year period. The significant decrease was due to a one-time impairment of $98 million. The reported figure also missed our estimate of $123 million.
International Solutions: Operating revenues of $234.3 million increased 393.4% from the year-ago quarter’s level of $47.5 million. Moreover, the top line beat our projection of $231 million.
Operating loss reached $55.3 million, compared unfavorably with the prior-year period loss of $14.5 million. The figure was below our projected loss of $63 million.
Offshore Solutions: Revenues of $188.3 million increased 554.6% from the year-ago quarter’s level of $29.2 million. The top line beat our projection of $180 million.
Operating profit totaled $16.4 million compared with $3.5 million in the year-ago quarter. The figure missed our estimate of $20.3 million.
Financial Position
In the reported quarter, this Zacks Rank #3 (Hold) company spent $67.6 million on capital programs. As of Dec. 31, 2025, HP had $247.2 million in cash and cash equivalents, while the long-term debt totaled $2 billion (debt-to-capitalization of 42.8%).
Guidance for Q2 & FY26
Operating guidance for the second quarter of fiscal 2026 reflects the segment-wise expectations of the company. The North America Solutions is projected to deliver direct margins between $205 million and $230 million, supported by an average rig count of approximately 132 to 138. International Solutions is expected to generate direct margins in the range of $12 million to $22 million, with an average rig count of roughly 57 to 63. Offshore Solutions are forecast to contribute direct margins between $20 million and $30 million, based on average management contracts and contracted platform rigs of approximately 30 to 35. Other operations of the company are expected to add incremental direct margin ranging from $3 million to $8 million.
For fiscal 2026, depreciation is now expected to total approximately $700 million, while research and development expenses are projected to remain around $25 million. General and administrative expenses are anticipated to fall within a range of $265 million to $285 million, cash taxes payable are expected to be approximately $95 million to $145 million, and interest expense is forecast at roughly $100 million.
How Have Estimates Been Moving Since Then?
Since the earnings release, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -188.39% due to these changes.
VGM Scores
Currently, Helmerich & Payne has a average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock has a grade of A on the value side, putting it in the top 20% for value investors.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Helmerich & Payne has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Helmerich & Payne, Inc. (HP): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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