Q: Can I get your thoughts on Precision Drilling’s latest quarter and overall thoughts on the company?
Thank you
Thank you
5i Research Answer:
PD's main concern has been high debt, but it is coming down and is now only 2X annual cash flow. Net debt is now less than $1B, versus more than $2B about six or seven years ago. The stock has moved with news, but remains cheap at 7X earnings. The quarter was solid, with a 3% beat on revenue estimates and a big beat on earnings. Revenue did fall 0.7%, however. The company also raised its stock buyback plans, up to 11% of its stock. International and Canada continue to do well, but US drilling remains a weak spot. But still, after years of essentially bad news, this was a solid result and decent outlook. Its valuation should improve as investors realize its balance sheet is being 'fixed'.