(281)-719-8904 KenFaulkenberry@AAAMP.com

Helmerich & Payne (HP) Stock Analysis

by | Dividend Aristocrats & Champions

Helmerich & Payne Logo

Helmerich & Payne Dividend

(updated 7/19/2017)

The Helmerich & Payne dividend has been paid continuously since 1959 and increased for 44 consecutive years;
qualifying the company as a Dividend Champion.

Price: $58.10
Current Dividend: $2.80

Dividend Yield: 4.8%
Cash Dividend Payout Ratio: 195%

Market Capitalization: 6.3 B
Enterprise Value: 5.7 B

Description

Sector: Energy
Industry: Oil & Gas Drilling

Helmerich & Payne (HP) is a contract drilling company engaged in drilling of oil and gas wells for exploration and production companies.

The company is a global firm with land operations throughout the United States, in the Gulf of Mexico, and internationally in South America, the Middle East, and Africa.

Revenues:
Drilling – U.S. Land (80%)
Drilling – International Land (12%)
Drilling – Offshore (8%)

Helmerich & Payne is a leader in innovation. Its flagship product, FlexRig , provides unparalleled performance, value, and safety to its customers.

SWOT Analysis

Strengths

Innovation! Helmerich & Payne has outmaneuvered all its competitors to become the leader in U.S. land drilling. A pristine balance sheet and high operating cash flow add to an already compelling story.

The supremacy of its FlegRig line provides HP a competitive advantage over competitors. Their market share is increasing during the current challenging environment for the industry.

Weaknesses

Low oil prices has caused the demand for oil rigs to plunge. There is tremendous oversupply of rigs available. As old contracts expire, renewals will be at much lower rates.

Opportunities

During challenging times the strong take advantage of the weak. HP has the financial strength to weather tough times and take advantage of the competition.

Threats

The company operates in an industry that is extremely competitive and prone to wide swings in supply and demand. A prolonged (many years) downturn in oil prices is hurting all players, including Helmerich & Payne.

Dividend Analyzer Checklist

(updated June 2017)

Dividend Safety Score (12/33 points)

Dividend Per Share (ttm): $2.79
Dividend Payout Ratio (ttm): -171%
Dividend Per Share (10 Year Growth): 32%
Cash From Operations (CFO) Per Share (ttm): $3.76
CFO Dividend Coverage (CFO / DPS):  1.4  (0/6 points)
Free Cash Flow (FCF) Per Share (ttm): $1.44
FCF Dividend Coverage (FCF / DPS): 0.5 (0/6 points)
Net Financial Debt: $ – 297 M
Total Assets: $6538 M
Net Financial Debt / Total Assets: -5% (11/12 points)
Net Financial Debt to EBITDA (ttm):  142%
Total Liabilities to Assets Ratio (Qtr.): 34%
Piotroski Score (1-9) (TTM): (1/9 points)

Profitability & Growth Score (10/33 points)

Revenue (10 Year Growth) *CAGR > 4.14%: 2.9% (0/4 points)
EPS Basic Cont. Operations (10 Year Growth) CAGR > 4.14%:  12.0% (4/4 points)
Cash From Operations (10 Year Growth) CAGR > 4.14%: 9.8% (6/6 points)
Operating Earnings Yield (ttm):  0.60%  (0/7 points)
Net Income (ttm): $-178 M
Gross Profit (ttm): $527
Total Assets: $6832 M
Gross Profitability Ratio = GP / Total Assets:  8.1%  (0/12 points)
Cash Return On Invested Capital (CROIC)(tttm): 3%
Return on Invested Capital (ROIC): -4%
Return on Invested Capital (ROIC) (5 Year Median): 14%
Return on Invested Capital (ROIC) (10 Year Median): 14%

Valuation Score (13/34 points)

Free Cash Flow Yield (ttm): 2.7% (4/9 points)
EV to EBIT (ttm): 144.3  (0/9 points)
EV to EBITDA (ttm): 15.2 (3/9 points)
PE10: 14.7 (6/7 points)
Price to Sales Ratio (ttm): 4.2
Price to Book Value (ttm): 1.4
Price to Earnings Ratio (P/E) (ttm): n/1

TOTAL POINTS – (35/100) (50 is an average score)

*Compound Annual Growth Rate (CAGR)
**A Compound Annual Growth Rate of 4.14% = a 50% gain over 10 years.

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Conclusion

(updated June 2017)

Helmerich & Payne (HP) is ranked #199 (out of 252) overall and #8 (out of 17) in the Energy Sector by the Dividend Analyzer.

Type of Investor / Recommendation

Large Diversified Dividend Portfolios / Below Average Option
Looking For Exposure to Energy  Sector / Can Be Considered
Deep Value Investors / AVOID

Portfolio Position Disclosures:
DVB Foundation Portfolio: None
DVB Dividend Growth: None
DVB High Income: None
Arbor Asset Allocation Model Portfolio (AAAMP): None

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Disclaimer: While Arbor Investment Planner has used reasonable efforts to obtain information from reliable sources, we make no representations or warranties as to the accuracy, reliability, or completeness of third-party information presented herein. The sole purpose of this analysis is information. Nothing presented herein is, or is intended to constitute investment advice. Consult your financial advisor before making investment decisions.
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