Yahoo Finance Halliburton (HAL) Down 2.8% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Halliburton (HAL). Shares have lost about 2.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Halliburton due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Halliburton Q1 Earnings Beat as Both Units Outperform
Halliburton Company reported first-quarter 2023 net income per share of 72 cents, surpassing the Zacks Consensus Estimate of 67 cents and well above the year-ago quarter profit of 35 cents (adjusted). The outperformance reflects stronger-than-expected profit from both its divisions and came in spite of the company’s exit from Russia.
Meanwhile, revenues of $5.7 billion were 32.5% higher than the corresponding period of 2022 and came ahead of the Zacks Consensus Estimate (by some $177 million). North American revenues rose 43.6% year over year to $2.8 billion, while revenues from Halliburton’s international operations were up 23.4% from the year-ago period to $2.9 billion. Investors should know that HAL has outsized exposure to the North American land drilling market.
Inside Halliburton’s Segments
Operating income from the Completion and Production segment was $666 million, more than doubling from the year-ago level of $296 million and ahead of the Zacks Consensus Estimate of $629 million. The division’s performance was buoyed by strength in the pressure pumping business and improving completion tool sales, to go with robust artificial lift activity in onshore North America and Kuwait.
Drilling and Evaluation unit profit improved from $294 million in the first quarter of 2022 to $369 million in the corresponding period of 2022. The division also managed to beat the Zacks Consensus Estimate of $362 million. This was primarily due to a pickup in wireline activity, drilling-associated services and testing services.
Balance Sheet
Halliburton reported first-quarter capital expenditure of $268 million. As of Mar 31, 2023, the Zacks Rank #3 (Hold) company had approximately $1.9 billion in cash/cash equivalents and $7.9 billion in long-term debt, representing a debt-to-capitalization ratio of 48.4. HAL also bought back $100 million worth its stock during the January-March period.
Management Remarks & Outlook
Halliburton — the world’s biggest provider of hydraulic fracking — noted that the strong first-quarter performance is a thumbs-up to its solid execution and strategic priorities in North America as well as international markets. Looking ahead, the company expects this recipe, and the tight service capacity, to drive strong margins home and away throughout this year and beyond.
Overall, Halliburton believes that its smart strategy, digital leadership, capital efficiency, and the global presence points to a rosy outlook. The Houston-based company’s cash flow generation capabilities and balance sheet strength should also ensure increased shareholder returns.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
At this time, Halliburton has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Halliburton has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Halliburton belongs to the Zacks Oil and Gas - Field Services industry. Another stock from the same industry, Liberty Oilfield Services (LBRT), has gained 3.5% over the past month. More than a month has passed since the company reported results for the quarter ended March 2023.
Liberty Oilfield Services reported revenues of $1.26 billion in the last reported quarter, representing a year-over-year change of +59.2%. EPS of $0.90 for the same period compares with -$0.03 a year ago.
Liberty Oilfield Services is expected to post earnings of $0.96 per share for the current quarter, representing a year-over-year change of +74.6%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Liberty Oilfield Services. Also, the stock has a VGM Score of A.
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