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Halliburton (HAL) Down 4.9% Since Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Halliburton Company (HAL - Free Report) . Shares have lost about 4.9% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it 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 catalysts.
Fourth Quarter 2016 Results
Halliburton 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 $0.04, above the Zacks Consensus Estimate of $0.02. However, revenues of $4,021 million missed the Zacks Consensus Estimate of $4,077 million amid the industry challenges posed by the oil slump.
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.
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 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%.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There have been eight revisions higher for the current quarter compared to two lower. In the past month, the consensus estimate has shifted by 27.42% due to these changes.
At this time, Halliburton's stock has an average Growth Score of 'C', however its Momentum is doing a lot better with an 'A'. However, the stock was allocated a grade of 'F' on the value side, putting it in the lowest quintile for this investment strategy.
Overall, the stock has an aggregte VGM Score of 'D'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for momentum investors than growth investors.
Outlook
Estimates have been trending upward for the stock. The magnitude of these revisions also looks promising. It comes with little surprise that the stock has a Zacks Rank #2 (Buy). We are expecting an above average return from the stock in the next few months.
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Halliburton (HAL) Down 4.9% Since Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Halliburton Company (HAL - Free Report) . Shares have lost about 4.9% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it 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 catalysts.
Fourth Quarter 2016 Results
Halliburton 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 $0.04, above the Zacks Consensus Estimate of $0.02. However, revenues of $4,021 million missed the Zacks Consensus Estimate of $4,077 million amid the industry challenges posed by the oil slump.
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.
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 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%.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There have been eight revisions higher for the current quarter compared to two lower. In the past month, the consensus estimate has shifted by 27.42% due to these changes.
Halliburton Company Price and Consensus
Halliburton Company Price and Consensus | Halliburton Company Quote
VGM Scores
At this time, Halliburton's stock has an average Growth Score of 'C', however its Momentum is doing a lot better with an 'A'. However, the stock was allocated a grade of 'F' on the value side, putting it in the lowest quintile for this investment strategy.
Overall, the stock has an aggregte VGM Score of 'D'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for momentum investors than growth investors.
Outlook
Estimates have been trending upward for the stock. The magnitude of these revisions also looks promising. It comes with little surprise that the stock has a Zacks Rank #2 (Buy). We are expecting an above average return from the stock in the next few months.