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Halliburton (HAL) Shares Leap After Q4 Earnings, Sales Beat
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Shares of Halliburton Company (HAL - Free Report) soared more than 6% in pre-market trading Monday after the oilfield services behemoth reported better-than-expected fourth quarter profit thanks to improved utilization and pricing gains in North America -- the company’s largest market by sales. With higher commodity prices supporting the surge in oil production and drilling activity, the company issued an upbeat outlook.
The world's second-largest oilfield services company after Schlumberger (SLB - Free Report) saw its income from continuing operations (adjusted for Venezuela write-downs and charges associated with U.S. tax reform) come in at 53 cents per share, above the Zacks Consensus Estimate of 46 cents -- the fourteenth consecutive quarterly outperformance. Moreover, revenues of $5,940 million beat the Zacks Consensus Estimate of $5,567 million.
Strong North America, and Improving International Market
Along the results, Halliburton also sounded optimistic in its view that the North American land market is improving rapidly, driven by increased utilization and pricing, particularly for pressure pumping. As it is, rig counts have generally been rising during the last one and half years 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 grew its Completion and Production unit revenue grew 8% sequentially, ahead of the U.S. land rig count growth.
Additionally, the outlook for Halliburton’s international market continues to improve. In fact, regional sales were up 11% sequentially in the fourth-quarter, driven by strong activity gains across a number of product services lines in Latin America, as well as increases in drilling and stimulation activity in the Eastern Hemisphere.
Halliburton Company Price, Consensus and EPS Surprise
Operating income from the Completion and Production segment was $552 million, significantly higher than the year-ago level of $85 million. The division also improved from previous quarter’s income of $525 million, helped by improved pressure pumping activity and pricing in the North American land market. Further, Halliburton experienced a year-end bump in the Gulf of Mexico completion tool sales, while software sales in Latin America and stimulation activity in the Eastern Hemisphere were higher as well.
Meanwhile, Drilling and Evaluation unit profit improved from $248 million in the fourth quarter of 2016 to $291 million this year. The number was also above the $180 million earned in the September quarter. The outperformance was on account of higher drilling activity in the Middle East and North America. This was supported by higher software sales and services in Latin America.
Balance Sheet
Halliburton’s capital expenditure in the fourth quarter was $439 million. For the full year, capital spending was $1,373 million.
As of Dec 31, 2017, the company had approximately $2,337 million in cash/cash equivalents and $10,430 million in long-term debt, representing a debt-to-capitalization ratio of 55.5%.
Zacks Rank & Stock Picks
Halliburton currently carries a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.
Meanwhile, one can look at better-ranked oilfield service players like ProPetro Holding Corp. (PUMP - Free Report) and C&J Energy Services, Inc. . ProPetro Holding is a Zacks Rank #1 (Strong Buy) stock, while C&J Energy carries a Zacks Rank #2 (Buy).
Founded in 2005, ProPetro Holding is an oilfield services company that primarily offers hydraulic fracturing to major oil and gas operators. The Midland, TX-headquartered firm surpassed estimates in each of the last two quarters.
C&J Energy Services offers services related to completion and production to the energy industry in North America. The Houston-TX based company has a good track of having outperformed estimates in two of the last three quarters.
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Halliburton (HAL) Shares Leap After Q4 Earnings, Sales Beat
Shares of Halliburton Company (HAL - Free Report) soared more than 6% in pre-market trading Monday after the oilfield services behemoth reported better-than-expected fourth quarter profit thanks to improved utilization and pricing gains in North America -- the company’s largest market by sales. With higher commodity prices supporting the surge in oil production and drilling activity, the company issued an upbeat outlook.
The world's second-largest oilfield services company after Schlumberger (SLB - Free Report) saw its income from continuing operations (adjusted for Venezuela write-downs and charges associated with U.S. tax reform) come in at 53 cents per share, above the Zacks Consensus Estimate of 46 cents -- the fourteenth consecutive quarterly outperformance. Moreover, revenues of $5,940 million beat the Zacks Consensus Estimate of $5,567 million.
Strong North America, and Improving International Market
Along the results, Halliburton also sounded optimistic in its view that the North American land market is improving rapidly, driven by increased utilization and pricing, particularly for pressure pumping. As it is, rig counts have generally been rising during the last one and half years 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 grew its Completion and Production unit revenue grew 8% sequentially, ahead of the U.S. land rig count growth.
Additionally, the outlook for Halliburton’s international market continues to improve. In fact, regional sales were up 11% sequentially in the fourth-quarter, driven by strong activity gains across a number of product services lines in Latin America, as well as increases in drilling and stimulation activity in the Eastern Hemisphere.
Halliburton Company Price, Consensus and EPS Surprise
Halliburton Company Price, Consensus and EPS Surprise | Halliburton Company Quote
Segmental Performance
Operating income from the Completion and Production segment was $552 million, significantly higher than the year-ago level of $85 million. The division also improved from previous quarter’s income of $525 million, helped by improved pressure pumping activity and pricing in the North American land market. Further, Halliburton experienced a year-end bump in the Gulf of Mexico completion tool sales, while software sales in Latin America and stimulation activity in the Eastern Hemisphere were higher as well.
Meanwhile, Drilling and Evaluation unit profit improved from $248 million in the fourth quarter of 2016 to $291 million this year. The number was also above the $180 million earned in the September quarter. The outperformance was on account of higher drilling activity in the Middle East and North America. This was supported by higher software sales and services in Latin America.
Balance Sheet
Halliburton’s capital expenditure in the fourth quarter was $439 million. For the full year, capital spending was $1,373 million.
As of Dec 31, 2017, the company had approximately $2,337 million in cash/cash equivalents and $10,430 million in long-term debt, representing a debt-to-capitalization ratio of 55.5%.
Zacks Rank & Stock Picks
Halliburton currently carries a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.
Meanwhile, one can look at better-ranked oilfield service players like ProPetro Holding Corp. (PUMP - Free Report) and C&J Energy Services, Inc. . ProPetro Holding is a Zacks Rank #1 (Strong Buy) stock, while C&J Energy carries a Zacks Rank #2 (Buy).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Founded in 2005, ProPetro Holding is an oilfield services company that primarily offers hydraulic fracturing to major oil and gas operators. The Midland, TX-headquartered firm surpassed estimates in each of the last two quarters.
C&J Energy Services offers services related to completion and production to the energy industry in North America. The Houston-TX based company has a good track of having outperformed estimates in two of the last three quarters.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Click for details >>