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On May 22, Zacks Investment Research upgraded oilfield services provider Halliburton Co. (HAL - Analyst Report)  to a Zacks Rank #2 (Buy).

Why the Upgrade?

Operating environment and growth prospects seem bright for Halliburton, as reflected by the rising earnings estimates for this leading Houston, Texas-based company. Over the last 60 days, the Zacks Consensus Estimate for the second quarter of 2013 has increased 7.14% to 75 cents per share, while that for 2013 went up 5.94% to $3.21 per share.

The momentum has been strong since Halliburton released its first quarter earnings results on Apr 22. Earnings per share from continuing operations – excluding a charge associated with the Gulf of Mexico disaster in 2010 – came in at 67 cents, beating the Zacks Consensus Estimate of 57 cents. This was aided by strong performance in its international business.

With respect to the earnings trend, Halliburton delivered positive earnings surprises in three of the last four quarters with an average beat of 9.16%. Moreover, Halliburton has been retaining shareholders’ confidence by returning wealth via dividend hikes. It increased its quarterly common stock dividend by 39% to 12.5 cents per share (50 cents per share annualized). The new dividend was paid on Mar 27, 2013 to shareholders of record as of Mar 6.

The long-term expected earnings and sales growth projections of 16.12% and 14.53%, respectively, are also fairly impressive.

Going forward, Halliburton anticipates benefiting from its leading position in the North American oilfield services market, improving its international margins, and expanding market penetration in deepwater and underserved international regions. We expect these trends to result in a strong operating environment leading to the delivery of positive earnings surprises.

Other Stocks to Consider

There are other oilfield services providers in the energy sector that are also performing well and are worth considering. These include Zacks Ranked #1 (Strong Buy) Dawson Geophysical Company (DWSN - Snapshot Report), Exterran Holdings Inc. (EXH - Snapshot Report) and Exterran Partners LP (EXLP - Snapshot Report).

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