Shares of Pioneer Energy Services Corp. (NYSE:PES) nosedived on Tuesday, plunging more than 26% by 2:00 p.m. EDT after the company reported weak second-quarter results.
We'll start with the good news, which is that Pioneer Energy Services recorded $154.8 million in revenue during the second quarter. That's 7% higher than the first quarter and up 44% year over year. Driving the improvement was an increase in demand and pricing for some of its services and better drilling rig utilization in Colombia.
However, despite that uptick in revenue, the company reported an adjusted loss of $14.8 million, or $0.19 per share. Not only did that miss analysts' expectations by $0.09 per share, but it was a deeper adjusted loss than it posted in the first quarter.
One of the issues was that margins in its production services business declined from 24% in the first quarter to 23% in the second due to lower utilization of some of its services and increased equipment rental costs. Meanwhile, the company reported a drop in average revenue per day in its drilling business along with lower margins due to higher repair and maintenance expenses.
On top of reporting a mediocre quarter, Pioneer unveiled disappointing guidance for the third quarter. The company noted that it's experiencing "some near-term activity moderation" due to a range of issues. Because of that, it anticipates that revenue from its production services segment will tumble sequentially by 3% to 5%.
While the uptick in drilling activities due to higher oil prices has helped boost Pioneer's revenue, that hasn't translated into improved profitability. It's unclear when that uptick will occur since the company expects its results to head in reverse in the third quarter. Because the company still can't turn itself around even with higher oil prices, investors should steer clear of this oil stock and consider one of these top-top tier companies instead.