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North America Helps Halliburton (HAL) Beat Q4 Earnings
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Major oilfield services provider Halliburton Company (HAL - Free Report) reported better-than-expected fourth quarter profit on the back of continued and effective cost management. The world’s No. 2 oilfield-services company’s tenth consecutive quarterly outperformance was also helped by improved utilization on the back of growing North American rig count.
Halliburton’s adjusted income per share from continuing operation (excluding special items) came in at 4 cents, above the Zacks Consensus Estimate of 2 cents. However, revenues of $4,021 million missed the Zacks Consensus Estimate of $4,077 million amid the industry challenges posed by the oil slump.
Oil services companies (like Halliburton) – providers of technical products and services to drillers of oil and gas wells – are generally the first of the U.S. energy firms to kick off an earnings season. While the world’s biggest oilfield services company Schlumberger Ltd. (SLB - Free Report) came out with year-end numbers on Friday, Jan 20, the remaining two of the so-called Big Four oilfield service and equipment providers – Baker Hughes Inc. and Weatherford International plc – report fourth quarter earnings over this week and next.
Bullish Sentiment Surrounding North America
Along the results, Halliburton also sounded optimistic in its view that the North American land market is improving and appears to be past the worst. As it is, rig counts have generally been rising during the last seven months since plunging to an all-time low of 404 in May 2016, with the addition of a flood of new units. As a proof of the recovery, Halliburton returned to operating profitability in the region, while garnering a larger market share and improving margins by an impressive 65%.
However, the international market recovery is set to start slower, with lower capex spend for the third successive year affecting economics across deepwater and mature field markets. Halliburton sees a turnaround in the in the international markets not before the second half of 2017.
Segmental Performance
Operating income from the Completion and Production segment was $85 million, falling sharply from the year-ago profit of $144 million. However, the division improved significantly from previous quarter’s income of $24 million, helped by improvements in North American pressure pumping activity.
Halliburton’s Drilling and Evaluation unit profit also dropped big time – from $399 million in the fourth quarter of 2015 to $248 million this year. However, the number was way above the $151 million earned in the Sep quarter on the back of year-end software sales and improved land drilling activity in the U.S.
Halliburton’s capital expenditure in the fourth quarter was $173 million, bringing the full-year spending to $798 million – much lower than the 2015 outgo of $2,184 million.
As of Dec 31, 2016, the Zacks Rank #1 (Strong Buy) company had approximately $4,009 million in cash/cash equivalents and $12,214 million in long-term debt, representing a debt-to-capitalization ratio of 56.4%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stock Performance
Halliburton’s stock performance has been pretty exciting lately. Shares are near fresh highs these days, and the stock has recovered nicely from its rough start to 2016 when oil prices fell to a 12-year low. In fact, Halliburton has run up 33% in the past 6 months. The price movement compares favorably with the Oil and Gas - Field Services industry, which has advanced just 14% over the same period.
Let’s wait and see if the latest earnings beat can take the stock even higher.
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North America Helps Halliburton (HAL) Beat Q4 Earnings
Major oilfield services provider Halliburton Company (HAL - Free Report) reported better-than-expected fourth quarter profit on the back of continued and effective cost management. The world’s No. 2 oilfield-services company’s tenth consecutive quarterly outperformance was also helped by improved utilization on the back of growing North American rig count.
Halliburton’s adjusted income per share from continuing operation (excluding special items) came in at 4 cents, above the Zacks Consensus Estimate of 2 cents. However, revenues of $4,021 million missed the Zacks Consensus Estimate of $4,077 million amid the industry challenges posed by the oil slump.
Oil services companies (like Halliburton) – providers of technical products and services to drillers of oil and gas wells – are generally the first of the U.S. energy firms to kick off an earnings season. While the world’s biggest oilfield services company Schlumberger Ltd. (SLB - Free Report) came out with year-end numbers on Friday, Jan 20, the remaining two of the so-called Big Four oilfield service and equipment providers – Baker Hughes Inc. and Weatherford International plc – report fourth quarter earnings over this week and next.
Bullish Sentiment Surrounding North America
Along the results, Halliburton also sounded optimistic in its view that the North American land market is improving and appears to be past the worst. As it is, rig counts have generally been rising during the last seven months since plunging to an all-time low of 404 in May 2016, with the addition of a flood of new units. As a proof of the recovery, Halliburton returned to operating profitability in the region, while garnering a larger market share and improving margins by an impressive 65%.
However, the international market recovery is set to start slower, with lower capex spend for the third successive year affecting economics across deepwater and mature field markets. Halliburton sees a turnaround in the in the international markets not before the second half of 2017.
Segmental Performance
Operating income from the Completion and Production segment was $85 million, falling sharply from the year-ago profit of $144 million. However, the division improved significantly from previous quarter’s income of $24 million, helped by improvements in North American pressure pumping activity.
Halliburton’s Drilling and Evaluation unit profit also dropped big time – from $399 million in the fourth quarter of 2015 to $248 million this year. However, the number was way above the $151 million earned in the Sep quarter on the back of year-end software sales and improved land drilling activity in the U.S.
Halliburton Co. Price, Consensus and EPS Surprise
Halliburton Co. Price, Consensus and EPS Surprise | Halliburton Co. Quote
Balance Sheet
Halliburton’s capital expenditure in the fourth quarter was $173 million, bringing the full-year spending to $798 million – much lower than the 2015 outgo of $2,184 million.
As of Dec 31, 2016, the Zacks Rank #1 (Strong Buy) company had approximately $4,009 million in cash/cash equivalents and $12,214 million in long-term debt, representing a debt-to-capitalization ratio of 56.4%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stock Performance
Halliburton’s stock performance has been pretty exciting lately. Shares are near fresh highs these days, and the stock has recovered nicely from its rough start to 2016 when oil prices fell to a 12-year low. In fact, Halliburton has run up 33% in the past 6 months. The price movement compares favorably with the Oil and Gas - Field Services industry, which has advanced just 14% over the same period.
Let’s wait and see if the latest earnings beat can take the stock even higher.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>