Why Patterson-UTI Energy's Shares Popped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of drilling contractor Patterson-UTI Energy jumped as much as 12% today, after the company released earnings.

So what: Revenue fell 9.9% from a year ago, to $652.8 million, but that was well ahead of the $599.5 million analysts expected. Net income fell 33%, to $58.9 million, or $0.40 per share, which was $0.12 better than estimates.

Now what: Sometimes, it's more about expectations than where your results are headed, and that's the case for Patterson today. Drilling has been down in recent quarters, partly because explorers are becoming more efficient -- so the bar had been set fairly low. The earnings beat was good, but with shares still trading at 10.5 times trailing earnings, and profit dropping, I'm not a buyer today. I'll need to see drilling pick up to jump in on this one.

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The article Why Patterson-UTI Energy's Shares Popped originally appeared on Fool.com.

Fool contributor Travis Hoium has no position in any stocks mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings, or follow his CAPS picks at TMFFlushDraw. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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