Helmerich & Payne (HP): Assessing Valuation After U.S. Court Sides with Company in Venezuela Expropriation Case

Helmerich & Payne (HP) secured a favorable ruling from a U.S. Court of Appeals, as the court determined Venezuela’s 2009 takeover of the company’s oil drilling rigs meets the criteria for expropriation under U.S. law. This decision clarifies the company’s legal footing in its longstanding claim against Petroleos De Venezuela, S.A.

See our latest analysis for Helmerich & Payne.

Helmerich & Payne’s legal win comes as the company’s share price has seen sharp swings this year, with a robust 49% gain over the past 90 days but a tough year-to-date share price return of -30%. Over the long haul, the stock’s five-year total shareholder return of 82% stands out. However, one-year returns have lagged, reflecting the shifting investor sentiment and ongoing uncertainty in the sector.

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Given the stock’s deep discounts from year-to-date highs but tepid analyst upside, the key question is whether Helmerich & Payne is currently undervalued or if the market already anticipates any future growth. Could there be a bargain hiding in plain sight?

Most Popular Narrative: 2.9% Overvalued

At $23.11, Helmerich & Payne’s stock sits just above the current most-followed narrative fair value estimate of $22.47, hinting at slightly more optimism in the market than in the consensus projections. Here is what one major factor driving this narrative looks like in detail.

The company's growing international footprint, highlighted by the successful KCA integration and new tender opportunities in Saudi Arabia and Argentina, positions H&P to capture incremental market share and expand EBITDA as geopolitical instability and supply concerns reinforce demand for high-spec rigs.

Read the complete narrative.

Wondering what ambitious financial assumptions are powering this target? The real surprise is buried under future cash flow projections, margin turnarounds, and aggressive expansion plays. Do not miss which industry dynamics could be causing analysts to boost valuation multiples beyond typical sector ranges. There is more to this forecast than meets the eye.

Result: Fair Value of $22.47 (OVERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, extended rig overcapacity or a prolonged downturn in U.S. shale could undermine both future margins and the underlying optimism in current forecasts.

Find out about the key risks to this Helmerich & Payne narrative.

Another View: Discounted Cash Flow Tells a Different Story

While the most-followed narrative and industry comparisons point to Helmerich & Payne being slightly overvalued, our SWS DCF model sees things differently. The DCF estimate suggests the stock is actually trading at a remarkable 54% discount to its calculated fair value. Could this deeper value call be the one investors are missing?

Look into how the SWS DCF model arrives at its fair value.

Build Your Own Helmerich & Payne Narrative

If you have your own take on the numbers or think a different angle might reveal something new, you can craft your own independent narrative in just a few minutes. Do it your way.

A great starting point for your Helmerich & Payne research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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