PRECISION DRILLING Corp (NYSE: PDS)

Sector: Energy Industry: Oil & Gas Drilling CIK: 0001013605
Market Cap 1.20 Bn
P/B 0.99
P/E 28.04
P/S 0.90
ROIC (Qtr) -2.67
Div Yield % 0.00
Rev 1y % (Qtr) -4.53
Total Debt (Qtr) 546.29 Mn
Debt/Equity (Qtr) 0.45

About

Price action

Investment thesis

Bull case

  • Strong operating cash flow of 325.78M provides robust 0.60x coverage of total debt 546.29M, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 27.76M provide 2.12x coverage of short-term debt 13.07M, demonstrating strong liquidity position and minimal refinancing risk.
  • Operating cash flow of 325.78M provides exceptional 416.27x coverage of minority interest expenses 782608.70, showing strong core operations.
  • Operating cash flow of 325.78M provides strong 27.42x coverage of stock compensation 11.88M, indicating sustainable incentive practices.
  • Strong tangible asset base of 2.02B provides 3.70x coverage of total debt 546.29M, indicating robust asset backing and low credit risk.

Bear case

  • Operating cash flow of 325.78M barely covers its investment activities of (156.81M), with a coverage ratio of -2.08, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • High receivables of 267.76M relative to inventory of 33.52M (7.99 ratio) suggests aggressive credit terms or collection difficulties, potentially masking revenue quality issues.
  • Operating earnings of 131.48M show weak coverage of depreciation charges of 225.79M, with a 0.58 ratio indicating high capital intensity and potential reinvestment needs.
  • Free cash flow of 173.17M represents just -1.71x of debt issuance (101.47M), suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • High depreciation of 225.79M relative to operating cash flow of 325.78M, which is 0.69x suggests significant maintenance capital requirements affecting free cash flow.

Segment consolidation. Breakdown of Revenue (2024)

Segment consolidation. Breakdown of Revenue (2024)

Peer comparison

Companies in the Oil & Gas Drilling
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 NE Noble Corp plc 6.35 Bn 28.00 1.84 1.98 Bn
2 RIG Transocean Ltd. 5.05 Bn -1.72 1.30 6.22 Bn
3 HP Helmerich & Payne, Inc. 3.55 Bn -11.28 0.87 2.03 Bn
4 SDRL Seadrill Ltd 2.66 Bn 78.24 1.95 0.61 Bn
5 NBR Nabors Industries Ltd 1.39 Bn 6.22 0.44 2.36 Bn
6 BORR Borr Drilling Ltd 1.32 Bn 18.28 1.29 2.06 Bn
7 PTEN Patterson Uti Energy Inc 1.27 Bn 5.52 0.47 1.29 Bn
8 PDS PRECISION DRILLING Corp 1.20 Bn 28.04 0.90 0.55 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.67 0.76
EV to Cash from Ops. EV/CFO 4.18 23.23
EV to Debt EV to Debt 2.49 2.43
EV to EBIT EV/EBIT 10.35 19.10
EV to EBITDA EV/EBITDA 3.77 3.73
EV to Free Cash Flow [EV/FCF] EV/FCF 7.86 -6.48
EV to Market Cap EV to Market Cap 1.14 1.71
EV to Revenue EV/Rev 1.02 1.62
Price to Book Value [P/B] P/B 0.99 1.68
Price to Earnings [P/E] P/E 28.04 16.53
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.00 0.46
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 3.04
Dividend per Basic Share Div per Share (Qtr) 0.00 0.37
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 19.24
Interest Coverage Int. cover (Qtr) 2.99 0.02
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 1.82 -7.78
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 55.35 1.60
Dividend Growth (1y) % Div 1y % (Qtr) 0.00 -1.79
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -73.36 -87.85
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -16.92 -158.89
EBIT Growth (1y) % EBIT 1y % (Qtr) -37.25 -35.99
EBT Growth (1y) % EBT 1y % (Qtr) -43.85 -0.36
EPS Growth (1y) % EPS 1y % (Qtr) -75.59 -61.36
FCF Growth (1y) % FCF 1y % (Qtr) -15.33 37.51
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -13.44 0.29
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.47 0.44
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.05
Cash Ratio Cash Ratio (Qtr) 0.13 0.46
Current Ratio Curr Ratio (Qtr) 1.58 1.53
Debt to Equity Ratio Debt/Equity (Qtr) 0.45 1.27
Interest Cover Ratio Int Coverage (Qtr) 2.99 0.02
Times Interest Earned Times Interest Earned (Qtr) 2.99 0.02
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 26.90 16.69
EBIT Margin % EBIT Margin % (Qtr) 13.66 1.58
EBT Margin % EBT Margin % (Qtr) 6.59 -5.28
Gross Margin % Gross Margin % (Qtr) 33.00 32.03
Net Profit Margin % Net Margin % (Qtr) 3.20 -6.63