Friday, July 31, 2015
HOS Beats by $0.28, Beats on Revenue
Hornbeck Offshore Services reported Q2 results Wednesday after the close. Revenues were $136.4mm, although down 20% over last year’s second quarter, beat expectations. The year-over-year decrease in revenues was primarily due to soft market conditions in the GoM, which led to the Company's decision to stack 18 OSVs on various dates in the fourth quarter of 2014 and thus far in 2015. 2Q2015 EBITDA was $66.3 million, an increase of $4.6 million, or 7%, from the comparable 1Q2015 EBITDA of $61.7 million Diluted EPS was up $0.11 over last quarter at $0.53, beating consensus by a substantial $0.28. The stock has been trading down over the last month due to declining oil prices. I was bullish on this quarter particularly for HOS therefore I anxiously waited for their earnings release for a rebound in the stock price. During Thursday’s trading session, the stock traded up as high as 14% from Wednesday’s close and closed up 8% on the day. Going forward, I strongly believe HOS is fundamentally strong enough and well positioned to withstand the volatile energy sector. With that being said, I will closely monitor the price to ensure it does not fall below our stop loss. As far as my valuation goes, I have not had time to fully update the model and will do so as soon as possible. For now, with our investment thesis still intact, the stock seems to still be fairly undervalued.