Please ensure Javascript is enabled for purposes of website accessibility

Why Helix Energy Solutions Stock Tanked 10% at the Open Today

By Reuben Gregg Brewer – Jul 27, 2021 at 10:49AM

Key Points

  • Earnings weren't great... and neither was the outlook.

Motley Fool Issues Rare “All In” Buy Alert

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The energy-services company reported earnings, and investors weren't pleased.

What happened

Shares of energy services provider Helix Energy Solutions (HLX 1.27%) fell just over 10% in the first few minutes of trading on July 27. The main driver for the swift decline was the company's after-the-close earnings release on July 26. Investors had plenty of reason to be upset.

So what

Helix Energy Solutions posted revenue of roughly $162 million in the second quarter of 2021, down from a touch more than $199 million in the same quarter of 2020. That's a nearly 19% decline.

The energy company lost $0.09 per share in the quarter, a notable drop from its $0.04 profit in the second quarter last year. And adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) fell almost 50% year over year in the quarter.

A person holding their head with a candlestick chart heading lower in the background.

Image source: Getty Images.

In fairness, Helix Energy Solutions managed to increase the amount of cash flow it generated, but it would be hard to call the second-quarter performance good. In fact, CEO Owen Kratz specifically noted that, "As expected, 2021 remains a challenging year."

Unfortunately, he also pointed out that a reprieve isn't expected until 2022. And even there, his wording wasn't particularly inspiring, as he explained that improving industry conditions "could yield benefits" next year. Given the quarterly performance and so-so outlook, it's not surprising that investors were downbeat.

Now what

Helix Energy Solutions operates in the highly cyclical energy-services sector. Its performance is really tied to capital-spending plans in the exploration and production space. That said, the supply/demand trends in the energy sector remain difficult to discern because of the coronavirus, so drillers have been reluctant to spend, despite improving oil prices.

Until that changes, Helix Energy Solutions will likely continue to struggle. Most investors would probably be better off looking elsewhere in the energy patch for investment opportunities today.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Nearly 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Helix Energy Solutions Group Stock Quote
Helix Energy Solutions Group
HLX
$6.38 (1.27%) $0.08

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
349%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/30/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.