The Razor's Edge

2-Year Price History

A Word Of Caution

Helmerich & Payne, Incorporated (HP) has experienced a very significant loss in market value recently. Clearly this drop in price will have an impact on the valuation but the recent events that caused the drop may have not been fully factored into our analysis yet. When a stock loses value very quickly it could be a sign that there is a fear of bankruptcy.

Of course, you may proceed to review our research report for this security, but please be aware that our model may not reflect significant factors surrounding this company.

Therefore, (and as always), check additional sources and available information regarding HP before making an investment decision.

Ockham's Rating

Rating Specific Information Withheld Premium Access Only

HP Revenue

For a long time, value investors have used the current share price relative to sales per share levels as an important valuation tool. We utilize a historical weighted average methodology that treats recent years more importantly in the calculation. When looking at HP through this framework, we can see that our weighted average historical high and low Price to Sales per share ratios over the last 10 years are 3.50x and 1.76x respectively.

Utilizing this range we can see that HP’s current Price to Sales per share ratio of 1.04x is significantly below its average levels historically. In fact, with a current price of $25.06, HP is a full 61% below its average Price to Sales ratio at comparable sales levels. This is a rare occurrence and, when taken in context of the other areas of our analysis, can be a strong positive for our outlook for HP.

HP Cash Earnings

As the old saying goes, "Cash is King!" However, we prefer to capture a few other items within our analysis to identify "cash earnings". Nevertheless, an analysis of Cash Earnings is absolutely pivotal to assessing a company's value, and currently HP is significantly below its historical average multiple of cash earnings as calculated by Ockham. Similar to our analysis of sales per share, Ockham looks at the last 10 years of cash earnings levels for HP to identify where the current high and low price levels have been historically in relation to profit per share. Again, we utilize a weighted average methodology which relies more heavily on recent years of data. This weighted average framework provides us with an average high Price to Cash Earnings ratio per share of 12.53 and a 6.65 low over the same period.

Now that HP’s current price is $25.06 and its Price to Cash Earnings ratio is 3.49, we are very positive on its outlook from the cash earnings perspective. In fact, HP is now trading a full 64% below its average historical Price to Cash Earnings ratio at these profit per share levels. When our clients ask us why HP has great long term potential, the Cash Earnings levels to current stock is one of our primary reasons. But naturally, now we need for the overall market to recognize this disparity.

HP Dividends

A positive Ockham rating does not require a company to pay out an inviting dividend or a dividend at all. However, we believe dividends provide a useful measure on a company's inherent expectations.

Comparable to our analysis of Sales and Cash Earnings per share, we examine dividend yields from HP against the historic high and low levels over an available data range. Because HP has an established history of paying a dividend to shareholders, there is value in comparing recent dividends to historical dividends. In HP’s case, the estimated annual dividend is $0.20 producing a current dividend yield of 0.80%. The highest dividend yield from HP in recent history was 1.52% while the lowest dividend yield was 0.25%. HP is not making us feel all that confident when their current dividend yield is below the historical median by 9.60%.