We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Oil Service ETFs Dip on Mixed Earnings: A Good Entry Point?
Read MoreHide Full Article
Speculation over oil price recovery has been rife since the past few months. The prolonged travails of the commodity oil, in fact, saw a rebound following the OPEC output cut deal signed in November. Against this backdrop, a close monitoring of the energy space that deals with the extraction of oil is warranted (read: Best Oil Rally in 7 Years; 3 Energy ETF Winners).
Presently, the Zacks Industry Rank for oil service companies is in the top 34% and the Sector Rank in the top 13%. Thanks to these upbeat industry scores, the sector is grabbing investors’ attention this earnings season as everyone is keen on finding out where the space is heading. Let’s delve a little deeper into the earnings picture and see how things are shaping up for the space.
In this piece, we have considered two stocks, namely – Schlumberger Ltd. (SLB - Free Report) and Halliburton Company (HAL - Free Report) . Among the duo, Halliburton reported earnings results on January 23 before the market opened while Schlumberger reported on January 20 (read: 7 ETF Areas to Hog the Limelight in 2017).
Results in Detail
Halliburton – the second largest oil service company – came up with an earnings beat and a revenue miss. Its adjusted income per share from continuing operations (excluding special items) came in at $0.04, above the Zacks Consensus Estimate of $0.02. Continued and effective cost management led to the outperformance. Halliburton posted revenues of $4.021 billion, narrowly missing the Zacks Consensus Estimate of $4.071.9 billion. Moreover, revenues deteriorated 21% on a year-over-year basis.
Schlumberger – the world’s largest oilfield services provider – came up with a decent Q4. Its fourth-quarter 2016 earnings of $0.27 per share (excluding charges and credits) were in line with the Zacks Consensus Estimate. However, the bottom line decreased substantially from $0.65 per share earned in the year-earlier quarter. Total revenue of $7.107 billion declined from the year-ago level of $7.744 billion but beat the Zacks Consensus Estimate of $7.096 billion.
Market Impact
The space got mixed signals thanks to motley performances by industry bellwethers, overshadowed slightly by weaker year-over-year results as expected. Post earnings, HAL was off over 2.9%. Probably, the stock spurred a sell-off in the entire oil services field which is why SLB lost about 2.6% on the same day.
We would like to note that Halliburton sounded optimistic about an improvement in the North American land market and indicated that the worst may be over. In any case, rig counts have been on an uptrend. With this, things might turn positive in the days to come, though we believe it is likely to take time.
Still, investors might want to know the impact on ETFs that are heavily invested in these popular oil service companies. Below we highlight three oil-services ETFs with considerable allocation to SLB and HAL that could be in focus following oil-service earnings (see all energy ETFs here):
This ETF invests about $263.2 million of assets in 37 securities, focusing solely on the energy world. The in-focus SLB takes up the first position here with 19.18% of holdings. Generally, when one stock accounts for as much as 20% of an ETF's weight, its individual performance decides much of the fund’s price movement. HAL takes up the second position with about 11.08% of total assets. The Zacks Rank #3 (Hold) fund was down about 2.3% on January 23 (read: Play EIA's Forecast with These ETFs).
OIH invests $1.3 billion of assets in 26 holdings and devotes as much as 20.01% of the portfolio weight to SLB, followed by 15.26% in HAL. The fund lost over 2.4% on January 23.
XLE invests $17.9 billion of assets in 38 stocks. The fund puts 8.32% of the portfolio weight in SLB, followed by 3.87% in HAL. The fund retreated about 1.1% on January 23. It has a Zacks Rank #3 with a High risk outlook.
Want key ETF info delivered straight to your inbox?
Zacks' free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Oil Service ETFs Dip on Mixed Earnings: A Good Entry Point?
Speculation over oil price recovery has been rife since the past few months. The prolonged travails of the commodity oil, in fact, saw a rebound following the OPEC output cut deal signed in November. Against this backdrop, a close monitoring of the energy space that deals with the extraction of oil is warranted (read: Best Oil Rally in 7 Years; 3 Energy ETF Winners).
Presently, the Zacks Industry Rank for oil service companies is in the top 34% and the Sector Rank in the top 13%. Thanks to these upbeat industry scores, the sector is grabbing investors’ attention this earnings season as everyone is keen on finding out where the space is heading. Let’s delve a little deeper into the earnings picture and see how things are shaping up for the space.
In this piece, we have considered two stocks, namely – Schlumberger Ltd. (SLB - Free Report) and Halliburton Company (HAL - Free Report) . Among the duo, Halliburton reported earnings results on January 23 before the market opened while Schlumberger reported on January 20 (read: 7 ETF Areas to Hog the Limelight in 2017).
Results in Detail
Halliburton – the second largest oil service company – came up with an earnings beat and a revenue miss. Its adjusted income per share from continuing operations (excluding special items) came in at $0.04, above the Zacks Consensus Estimate of $0.02. Continued and effective cost management led to the outperformance. Halliburton posted revenues of $4.021 billion, narrowly missing the Zacks Consensus Estimate of $4.071.9 billion. Moreover, revenues deteriorated 21% on a year-over-year basis.
Schlumberger – the world’s largest oilfield services provider – came up with a decent Q4. Its fourth-quarter 2016 earnings of $0.27 per share (excluding charges and credits) were in line with the Zacks Consensus Estimate. However, the bottom line decreased substantially from $0.65 per share earned in the year-earlier quarter. Total revenue of $7.107 billion declined from the year-ago level of $7.744 billion but beat the Zacks Consensus Estimate of $7.096 billion.
Market Impact
The space got mixed signals thanks to motley performances by industry bellwethers, overshadowed slightly by weaker year-over-year results as expected. Post earnings, HAL was off over 2.9%. Probably, the stock spurred a sell-off in the entire oil services field which is why SLB lost about 2.6% on the same day.
We would like to note that Halliburton sounded optimistic about an improvement in the North American land market and indicated that the worst may be over. In any case, rig counts have been on an uptrend. With this, things might turn positive in the days to come, though we believe it is likely to take time.
Still, investors might want to know the impact on ETFs that are heavily invested in these popular oil service companies. Below we highlight three oil-services ETFs with considerable allocation to SLB and HAL that could be in focus following oil-service earnings (see all energy ETFs here):
iShares US Oil Equipment & Services ETF (IEZ - Free Report)
This ETF invests about $263.2 million of assets in 37 securities, focusing solely on the energy world. The in-focus SLB takes up the first position here with 19.18% of holdings. Generally, when one stock accounts for as much as 20% of an ETF's weight, its individual performance decides much of the fund’s price movement. HAL takes up the second position with about 11.08% of total assets. The Zacks Rank #3 (Hold) fund was down about 2.3% on January 23 (read: Play EIA's Forecast with These ETFs).
VanEck Vectors Oil Services ETF (OIH - Free Report)
OIH invests $1.3 billion of assets in 26 holdings and devotes as much as 20.01% of the portfolio weight to SLB, followed by 15.26% in HAL. The fund lost over 2.4% on January 23.
Energy Select Sector SPDR Fund (XLE - Free Report)
XLE invests $17.9 billion of assets in 38 stocks. The fund puts 8.32% of the portfolio weight in SLB, followed by 3.87% in HAL. The fund retreated about 1.1% on January 23. It has a Zacks Rank #3 with a High risk outlook.
Want key ETF info delivered straight to your inbox?
Zacks' free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>