Precision Drilling (TSX:PD) Stock Can Q3 Earnings Support Its Rally

Precision Drilling walked into this Q3 2026 print with momentum, the share price up 38% over three months and closing at CA$147.65 on 28 October. The fresh numbers show the real story. Revenue for the quarter came in at about CA$532m and net income reached roughly CA$21m, a clear shift back into the black for a contractor that has been wrestling with losses on a trailing basis.

The emotional heat sits in that gap. Traders have been pricing in a recovery story for months while the actual earnings profile is only now turning the corner. This sets up a tension between optimism and what the cash flow and drilling margins currently justify.

Appreciate the sharp share price move and Precision Drilling’s return to profitability, but remain cautious about the durability of those margins. Compare what you are seeing here against our list of solid balance sheet and fundamentals stocks (6 results).

Q3 2026 Earnings Summary

• Revenue (Q3 2026 vs. Q3 2025): CA$531.7m vs. CA$462.3m (up about 15%)
• Net Income (Excl. Extra Items, Q3 2026 vs. Q3 2025): CA$20.9m profit vs. CA$6.8m loss (shift back to positive earnings)
• Basic EPS (Q3 2026 vs. Q3 2025): CA$1.65 vs. a loss of CA$0.51 per share (return to positive per-share earnings)
• Adjusted EBITDA (Q3 2026 vs. Q3 2025): CA$125m vs. a lower result a year ago (management reported stronger underlying cash generation)

Reactivation costs dragged Precision Drilling’s U.S. margins even as rigs grew. Ask Charlie what could unlock Precision Drilling’s U.S. margins next.

Evaluating Precision Drilling’s Tech-Led Upside Claims

For the bullish view to hold, Precision Drilling needs its technology to shift contracts toward higher value work, not just higher rig counts.

"Alpha digital tools, robotics and real time data systems that have already supported record low reported mechanical downtime in Canada and the U.S. create room for Precision Drilling to pursue a service model in which uptime and well performance become explicit pricing levers, with potential upside for net margins as contracts roll."

Q3 shows early progress toward that ambition. Record low downtime aligns with higher Canadian and U.S. activity, while adjusted EBITDA of CA$125m and ongoing Alpha and EverGreen rollouts indicate the tech stack is contributing to a healthier earnings mix, even as U.S. margins still reflect reactivation drag.

The price and this Narrative do not agree. → Uncover what this Narrative says Precision Drilling is actually worth.

Precision Drilling: Bear Risks Still On The Table

Bearish investors worry that Precision Drilling’s efficiency story cannot fully offset rising costs and capital needs.

"the sharp drop in U.S. daily operating margins from US$9,291 in Q1 2026 to US$6,212 in Q2 2026 suggests that higher reactivation and operating costs can quickly outstrip these benefits. This could limit any improvement in segment margins and overall earnings."

Q3 does not entirely clear that hurdle. U.S. daily margins of US$7,653 are above Q2 but still below the prior year, with six rig reactivations explicitly diluting profitability. Capex lifted to a range of C$275 to C$285 million, including upgrades, so capital intensity remains high even as adjusted EBITDA improves.

Hunt For Pricing Disconnects

Precision Drilling now has earnings that better align with the optimism traders previously priced in. The real opportunity sits in finding stocks that could be undervalued before the market corrects them.

• Company 1 - 48% below our estimate - targets higher grade ore zones to lift output and reduce unit costs.
• Company 2 - 46% below our estimate - builds an omnichannel apparel platform using premium products and limited markdowns to support margins.
• Company 3 - 36% below our estimate - folds acquired engineering specialists into a broader network to pursue recurring infrastructure and water programs.

That is three of the list. See all 4 potentially undervalued companies →

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com