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What: Shares of Hercules Offshore (Nasdaq: HERO ) , a drilling-services specialist, rose more than 11% in early trading after chief executive John Rynd gave investors an upbeat assessment of his company's prospects for the remainder of the year.
So what: Speaking during today's conference call with analysts, Rynd said day rates on its shallow water rigs has been rising steadily over the past two months. "Given our largely fixed operating cost structure … any increase in day rates largely falls to the bottom line," Rynd said in his opening comments.
Now what: Investors' optimism is understandable, even if Hercules' Q2 results came in short of estimates. Revenue climbed 8% to $170.2 million, yet the driller's net loss increased by a penny, to $0.18 a share, over last year's Q2. Analysts were calling for a $0.16-per-share loss on $175.3 million in revenue. Be careful if you buy here, Fool. As promising as this growth story seems, Hercules Offshore has yet to make good. Do you agree? Disagree? Let us know what you think using the comments box below.
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