NEW YORK (TheStreet) -- Shares of oil driller Helmerich & Payne (HP) - Get Helmerich & Payne, Inc. (HP) Report are down nearly 5% Thursday after the company warned its results for 2015 would be hit by lower oil prices. The company was able to beat fiscal first-quarter expectations but that was not enough to ease investors' concern things can still get worse.
The Tulsa company said Thursday that it earned $203 million in its fiscal first quarter, resulting in $1.85 per share. Earnings, adjusted for non-recurring gains, were $1.70 per share. That's more than enough to beat estimates of $1.55 per share.
Helmerich & Payne, which also specializes in oil and gas well-drilling, reported revenue of $1.06 billion for the quarter ending in December, also topping expectations of $977 million. According to the company's guidance, future quarters will be painful.
Oil prices at six-year lows are significantly impacting upon spot pricing and drilling activity in the U.S., and we expect this to unfavorably impact our quarterly results during the rest of fiscal 2015, said CEO John Lindsay, in a statement.
Lindsay's comments are consistent with what industry experts have said, which is that things are going to get worst before they get better. Despite some signs of stabilization, some analysts predict a bottom in oil prices won't be reached until around $40 per barrel.
Shares of most energy companies, especially those that deal in drilling and exploration, have been punished, with Helmerich & Payne one of the hardest hit. Its stock fell by as much as 8% earlier Thursday, which meant a loss of close to 20% of its value in 2015 and close to 50% in the last six months.
The company's CEO believes the company is "positioned to successfully navigate through the down-cycle as a result of our strong balance sheet, our term contract coverage, and our modern fleet of AC drive FlexRigs."
Still, Helmerich & Payne stock will continue to be pressured until oil prices stabilize well above $50 per barrel. The glut has to clear, too. For this to happen, however, either demand has to pick up or the Organization of the Petroleum Exporting Countries has to cut back on output.Neither scenario is likely to happen in the time frame to make these shares worth the risk.
The good news is, current shareholders have a strong 5% dividend to help lessen the blow. But new investors should stay away.
TheStreet Ratings team rates HELMERICH & PAYNE as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate HELMERICH & PAYNE (HP) a HOLD. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and increase in net income. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, a generally disappointing performance in the stock itself and feeble growth in the company's earnings per share."
You can view the full analysis from the report here: HP Ratings Report
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.