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Bear of the Day: Halliburton (HAL)

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Halliburton Company (HAL - Free Report) continues to feel the pressure of the weak energy industry. This Zacks Rank #5 (Strong Sell) is expected to see declining earnings the next 2 years.

Halliburton provides services and products to the energy industry worldwide. It offers products to customers from exploration to drilling to well construction and completion to optimizing production.

Beat on Earnings in Q3 But Revenue Declined

On Oct 19, Halliburton reported third quarter results and surprised the Street by actually beating the Zacks Consensus by 4 cents.

However, total company revenue fell 6% to $5.6 billion sequentially. North America led the decline, falling 7% sequentially, due to continued declines in activity and pricing pressure.

Mirroring what Schlumberger said, it saw another step down in activity in the industry in the third quarter.

It continues to move forward with its acquisition of Baker Hughes, however. That deal is still expected to close later this year.

Analysts Down Beat

There's nothing the energy companies can do but admit that the market conditions are challenging.

But the turnaround doesn't seem imminent either.

16 estimates were cut for the full year in the last 30 days. It has pushed the Zacks Consensus down to $1.47 from $1.60. That is an earnings decline of 63% compared to 2014 when it made $4.02.

The analysts don't see a turnaround in 2016 either. Earnings are expected to decline another 14%.

Are Shares a Deal?

Like the rest of the energy industry, Halliburton's shares have plunged.

But they're not exactly a deal either with a forward P/E of 26. And earnings show no sign of a recovery soon.

If you must buy a stock in the energy sector, consider only those with the best Zacks Ranks. Gulfmark Offshore, Inc. ((GLF) is a Zacks Rank #2 (Buy).

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Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Insider Trader and Value Investor services. You can follow her on twitter at @TraceyRyniec.




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