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Halliburton (HAL) Likely to Beat on Q2 Earnings: Here's Why

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Halliburton Company (HAL - Free Report) is set to release second-quarter 2021 results before the opening bell on Jul 20. The current Zacks Consensus Estimate for the to-be-reported quarter is 22 cents per share on revenues of $3.75 billion.

Let’s delve into the factors that might have influenced the oilfield service company’s performance in the June quarter. But it’s worth taking a look at Halliburton’s previous-quarter performance first.

Highlights of Q1 Earnings & Surprise History

In the last reported quarter, this Houston, TX-based provider of technical products and services to drillers of oil and gas wells beat the consensus mark as the Drilling and Evaluation segment outperformed the Zacks Consensus Estimate. Halliburton had reported net income per share of 19 cents that went past the Zacks Consensus Estimate of 17 cents. The company’s quarterly revenues of $3.5 billion outperformed the Zacks Consensus Estimate by 2.4%.

As far as earnings surprises are concerned, Halliburton beat the Zacks Consensus Estimate in each of the last four quarters, delivering an earnings surprise of 53.68%, on average. This is depicted in the graph below:

Halliburton Company Price and EPS Surprise

Halliburton Company Price and EPS Surprise

Halliburton Company price-eps-surprise | Halliburton Company Quote

Trend in Estimate Revision

The Zacks Consensus Estimate for the second-quarter bottom line remained the same in the last seven days. The estimated figure indicates a 340% surge year over year. The Zacks Consensus Estimate for revenues, meanwhile, suggests a 17.26% increase from the year-ago period.

Factors to Consider

Oil prices have rebounded sharply, revisiting their multi-year highs following the vaccine progress and the ongoing macroeconomic recovery, and drilling activity — an important factor for services companies — has been modestly picking up as a result. In the United States, a region on which Halliburton is highly dependent, rig count at the end of the second quarter was 470 compared with 417 three months ago, in sync with the strength in commodity prices. Consequently, the Zacks Consensus Estimate for the second-quarter operating income of Completion & Production and Drilling & Evaluation is pegged at $312 million and $155 million, respectively, indicating an increase of 96.2% and 22% year over year.

On top of this, the company is likely to have benefited from cost-cutting efforts. Halliburton’s cash outflows as capital expenditure continue to fall as the company reigns in its spending levels. For 2020, the company halved its capital expenditures by almost 50% to $730 million and looks to keep it essentially flat this year. This is expected to have provided a further boost to the company’s second-quarter earnings and cash flows.

Why a Likely Positive Surprise?

Our proven model predicts an earnings beat for Halliburton this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Halliburton has an Earnings ESP of +0.20% and a Zacks Rank #2.

Other Stocks to Consider

Halliburton is not the only energy company looking up this earnings cycle. Here are some other firms from the space that you may want to consider on the basis of our model:

Ovintiv Inc. (OVV - Free Report) has an Earnings ESP of +12.15% and a Zacks Rank #1. The firm is scheduled to release earnings on Jul 27.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Range Resources Corporation (RRC - Free Report) has an Earnings ESP of +9.62% and is Zacks #1 Ranked. The firm is scheduled to release earnings on Jul 26.

Hess Corporation (HES - Free Report) has an Earnings ESP of +35.30% and is Zacks #1 Ranked. The firm is scheduled to release earnings on Jul 28.