Precision Drilling Exceeds Earnings Expectations but Struggles with Revenue

Strong Earnings but Revenue Concerns

Precision Drilling (PDS) reported quarterly earnings of $1.69 per share, surpassing the Zacks Consensus Estimate of $1.55. This performance shows a significant increase compared to $1.08 per share recorded a year earlier. The earnings figures are adjusted for non-recurring items.

This results in an earnings surprise of 9.03%. In the previous quarter, analysts predicted a loss of $0.62 per share; however, Precision Drilling surprised the market by posting earnings of $1.05, a remarkable 269.35% surprise.

Over the last year, the company has exceeded consensus EPS estimates three out of four times.

Revenue Misses Expectations

For the quarter ending September 2024, Precision Drilling, operating in the Zacks Oil and Gas – Drilling industry, reported revenues of $349.79 million. This figure fell short of the Zacks Consensus Estimate by 1.64% but marked an increase from revenue of $333.04 million in the same quarter last year. The company has also outperformed consensus revenue forecasts two times in the past four quarters.

The stock’s price movement following these results will largely depend on management’s commentary during the earnings call, especially concerning future earnings expectations.

Since the start of the year, Precision Drilling shares have increased approximately 6.7%, while the S&P 500 has gained 22.1%.

What Lies Ahead for Precision Drilling?

Investors are left wondering: What’s next for Precision Drilling? Answers may not be straightforward, but examining the company’s earnings outlook can shed some light. This includes not only current consensus earnings expectations for upcoming quarters but also how these expectations have shifted recently.

Research has shown a strong connection between short-term stock movements and trends in earnings estimate revisions. Investors can monitor these revisions themselves or utilize tools like the Zacks Rank, which has demonstrated an excellent track record in leveraging the power of earnings revisions.

Leading up to this earnings release, the trend for estimate revisions for Precision Drilling has been unfavorable. Although this could change following the latest earnings report, the current trend has resulted in a Zacks Rank #4 (Sell) for the stock, suggesting a potential underperformance compared to the overall market in the near term. For those interested, a list of today’s Zacks #1 Rank (Strong Buy) stocks is available.

Looking ahead, it will be interesting to see how estimates evolve for the upcoming quarters and the current fiscal year. Currently, the consensus EPS estimate stands at $1.90 on projected revenues of $383.62 million for the next quarter and $6.57 on revenues of $1.46 billion for the full fiscal year.

Investors should also consider that the broader industry outlook can significantly impact the stock’s performance. At present, the Zacks Industry Rank places Oil and Gas – Drilling in the bottom 24% of over 250 Zacks industries. Historical data suggests that stocks in the top 50% of ranked industries tend to outperform those in the bottom half by more than a factor of two to one.

An Eye on Seadrill

Another company in the same sector, Seadrill (SDRL), has not yet released its earnings results for the quarter ended September 2024. These results are set to come out on November 12.

Seadrill is anticipated to report quarterly earnings of $0.05 per share, representing a substantial year-over-year decrease of 95.5%. Over the past month, the consensus EPS estimate for Seadrill has been revised 11% upward to the current figure.

Revenues for Seadrill are expected to be around $337 million, down 18.6% from the previous year’s quarter.

Should You Consider Investing in Precision Drilling Corporation (PDS)?

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Precision Drilling Corporation (PDS): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.