Back to top

Image: Bigstock

Is it Worth Holding Halliburton (HAL) in Your Portfolio?

Read MoreHide Full Article

We issued an updated research report on leading oilfield services provider Halliburton Company (HAL - Free Report) on Mar 8, 2017. The company’s focus on international markets is encouraging. However, commodity price volatility remains an overhang on the stock.

As a result, the company carries a Zacks Rank #3 (Hold), implying that the stock will perform in line with the broader U.S. equity market over the next one to three months. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Halliburton’s strong focus on the international market instead of confining its operations to North America is encouraging. This is because the continent has been witnessing intense competition after the shale revolution, while growth opportunities in the international market are increasing. We believe that the oilfield services provider is poised to gain in the long run from its operations outside North America as technologies similar to those provided by the company are being adopted internationally.

Halliburton shares have gained almost 49% in the last one year, handily outperforming both the Zacks categorized Oil & Gas-Field Services industry and bigger rival Schlumberger Limited (SLB - Free Report) that registered increases of 19.8% and 6.7%, respectively, over the same time period.

 

 

Halliburton’s growth is supported by back-to-back earnings beat as well as improvement in the crude price scenario following the OPEC and non-OPEC players’ announcement of slashing production. In fact, the oilfield services company has an incredible earnings history as it has not missed estimates even once since mid-2014.

However, the termination of the much-awaited merger between Halliburton and Baker Hughes Incorporated disappointed investors. Following opposition from the U.S. and European regulators, Halliburton and Baker Hughes called off their $28 billion merger. Accordingly, Halliburton paid Baker Hughes $3.5 billion in termination fees – one of the highest in the U.S. corporate history. No wonder, this hurt Halliburton's liquidity. 

Halliburton’s dividend payment record is not very encouraging either. The current dividend yield of 1.4% for the company is less than 1.9% yield for the broader industry. Halliburton’s yield is also lower than other oilfield services majors like Schlumberger and Core Laboratories N.V. (CLB - Free Report) , which have yields of 2.6% and 2%, respectively.

Commodity price volatility is another cause of concern for Halliburton. In fact, U.S. producers are gathering to the oil patches and have been increasing production. This has somewhat offset the crude price improvement following OPEC’s decision to cut output. The development on this front could lead to lower activity and limit demand for Halliburton's offerings.

8 Stocks with Huge Profit Potential                                                                

Just released: Driverless Cars: Your Roadmap to Mega-Profits Today. In this latest Special Report, Zacks’ Aggressive Growth Strategist Brian Bolan explores a full-blown technological breakthrough in the making – autonomous cars. He also spotlights 8 stocks with tremendous gain potential to feed off this phenomenon. Click to see the stocks right now >>


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Schlumberger Limited (SLB) - free report >>

Halliburton Company (HAL) - free report >>

Core Laboratories Inc. (CLB) - free report >>