A month has gone by since the last earnings report for Halliburton (
HAL Quick Quote HAL - Free Report) . Shares have added about 0.3% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Halliburton due for a pullback? 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.
Halliburton Q4 Earnings Top Estimates Halliburton Company reported fourth-quarter 2020 adjusted net income per share of 18 cents, beating the Zacks Consensus Estimate of 15 cents. The outperformance reflects stronger-than-expected profits from both its divisions. However, the bottom line compared unfavorably with the year-ago adjusted profit of 32 cents as the slump in oil prices has pushed drilling activity lower by introducing tremendous uncertainty around the exploration and production spending outlook. Meanwhile, revenues of $3.2 billion were 37.6% lower than the year-ago quarter but essentially matched the Zacks Consensus Estimate. North American revenue fell 46.9% year over year to $1.2 billion, while revenue from Halliburton’s international operations was down 30% from the year-ago period to $2 billion. Management’s Outlook The world’s biggest provider of hydraulic fracking noted that the North American activity levels are finally gathering momentum, while international operations are likely to bottom out in the first quarter of 2021. The company’s disciplined execution, cost-cutting measures and improvements in service offerings should lead to strong margins and cash flows. With the most encouraging macro backdrop in months and the sector’s recovery from the coronavirus-induced depths, Halliburton is targeting industry-leading returns and strong free cash flow. Segmental Performance Operating income from the Completion and Production segment was $282 million, 27.1% below the year-ago level of $387 million. The division’s performance was affected by weakness in pressure pumping operations in Saudi Arabia and a soft completion tools market in Eurasia and Australia. However, the segment profit was ahead of the Zacks Consensus Estimate of $236 million due to strengthening North American activity across product lines, an uptick in stimulation job in Argentina and Kuwait, improving completion tools sales in Africa, Southeast Asia, and Norway, and, finally, robust well intervention services overseas. Drilling and Evaluation unit profit fell from $224 million in the fourth quarter of 2019 to $117 million in the corresponding period of 2020. This was primarily due to decreased project management activity in Europe/Africa/CIS, the Middle East, and Mexico, together with weak wireline activity in Asia Pacific and Saudi Arabia. Despite these setbacks, the division managed to beat the Zacks Consensus Estimate of $115 million on increased drilling-associated activities in North America and Brazil, higher wireline operations in North America and Latin America, improved fluids business in Asia Pacific and Guyana, as well as increased software revenues worldwide. Balance Sheet Halliburton reported fourth-quarter capital expenditure of $218 million. As of Dec 31, 2020, the company had approximately $2.6 billion in cash/cash equivalents and $9.1 billion in long-term debt, representing a debt-to-capitalization ratio of 64.7%. How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
Currently, Halliburton has a nice Growth Score of B, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions has been net zero. Notably, Halliburton has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.