Why Precision Drilling (PDS) Stock Is Jumping This Morning

NEW YORK (TheStreet) -- Shares of Precision Drilling Corp. (PDS) are higher by 4.40% to $13.99 in pre-market trading on Wednesday after the company announced a strategic technology service agreement and marketing alliance with Schlumberger  (SLB).

Precision Drilling, a contract drilling company, said it entered into the agreement with the leading provider of oilfield services to further the company's High Performance, High Value strategy, while continuing to expand its integrated directional drilling services.

Additionally, Precision Drilling was upgraded to "buy" from "hold" at Deutsche Bank (DB) today, as the firm feels the industry has "considerable upside potential."

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Separately, TheStreet Ratings team rates PRECISION DRILLING CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate PRECISION DRILLING CORP (PDS) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, good cash flow from operations, growth in earnings per share and expanding profit margins. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • PDS's revenue growth has slightly outpaced the industry average of 10.9%. Since the same quarter one year prior, revenues rose by 12.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 55.74% over the past year, a rise that has exceeded that of the S&P 500 Index. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • Net operating cash flow has significantly increased by 170.26% to $170.13 million when compared to the same quarter last year. In addition, PRECISION DRILLING CORP has also vastly surpassed the industry average cash flow growth rate of 49.24%.
  • PRECISION DRILLING CORP has improved earnings per share by 6.1% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. During the past fiscal year, PRECISION DRILLING CORP increased its bottom line by earning $0.67 versus $0.17 in the prior year.
  • 41.22% is the gross profit margin for PRECISION DRILLING CORP which we consider to be strong. Regardless of PDS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, PDS's net profit margin of 15.10% compares favorably to the industry average.
  • You can view the full analysis from the report here: PDS Ratings Report
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