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Big oil services companies started releasing their quarterly numbers from this week. The outlook is bullish this time thanks to the upbeat oil market. OPEC+ producers agreed on deep output cuts, seeking to spur a recovery in crude prices despite repeated calls from U.S. President Joe Biden’s administration for the group to pump more to lower fuel prices and contain global inflation.
Against this backdrop, a close monitoring of the energy space, which deals with oil field services, is warranted. Let’s delve a little deeper into the earnings picture and see how things are shaping up for the space.
In this piece, we have considered two stocks, namely – Schlumberger (SLB - Free Report) and Halliburton (HAL - Free Report) .
Schlumberger in Focus
On Oct 20,Schlumberger Limited (SLB - Free Report) has reported third-quarter 2022 earnings of 63 cents per share (excluding charges and credits), comfortably beating the Zacks Consensus Estimate of 55 cents. The bottom line significantly increased from the year-ago quarter’s earnings of 36 cents.
The oilfield service giant recorded total quarterly revenues of $7,477 million, outpacing the Zacks Consensus Estimate of $7,143 million. The top line also improved from the year-ago quarter’s $5,847 million.
Halliburton in Focus
On Oct 25,Halliburton Company (HAL - Free Report) reported third-quarter 2022 adjusted net income per share of 60 cents, surpassing the Zacks Consensus Estimate of 56 cents and improving from the year-ago profit of 28 cents. The outperformance reflects stronger-than-expected profit from both its divisions and came in spite of the company’s exit from Russia.
Revenues of $5.4 billion were 38.8% higher than the corresponding period of 2021 and above the Zacks Consensus Estimate of $5.3 billion. North American revenues rose 63.2% year over year to $2.6 billion, while revenues from Halliburton’s international operations were up 21.2% from the year-ago period to $2.7 billion. Investors should know that HAL has outsized exposure to the North American land drilling market.
Market Impact
Investors might want to know the impact of earnings results on ETFs that are heavily invested in these popular oil service companies. Below we highlight three oil-services ETFs with considerable allocation to SLB and HAL that could be in focus:
OIH invests $2.79 billion of assets in 25 holdings and devotes as much as 22.45% of the portfolio weight to SLB, followed by 11.48% in HAL. Generally, when one stock accounts for as much as 20% of an ETF's weight, its individual performance decides much of the fund’s price movement. OIH gained 13.8% in the past five days (as of Oct 26, 2022).
This ETF invests about $200.0 million of assets in about 26 securities, focusing solely on the energy world. The in-focus SLB takes up the first position here with 24.94% of holdings. HAL takes up the second position with about 21.28% of total assets. The fund added 14.7% in the past five days.
XLE invests about $41.62 billion of assets in 23 stocks. The fund puts 5.11% of the portfolio weight in SLB. It added about 7.2% in the past five days.
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Upbeat Earnings Boost Oil Services ETFs
Big oil services companies started releasing their quarterly numbers from this week. The outlook is bullish this time thanks to the upbeat oil market. OPEC+ producers agreed on deep output cuts, seeking to spur a recovery in crude prices despite repeated calls from U.S. President Joe Biden’s administration for the group to pump more to lower fuel prices and contain global inflation.
Against this backdrop, a close monitoring of the energy space, which deals with oil field services, is warranted. Let’s delve a little deeper into the earnings picture and see how things are shaping up for the space.
In this piece, we have considered two stocks, namely – Schlumberger (SLB - Free Report) and Halliburton (HAL - Free Report) .
Schlumberger in Focus
On Oct 20,Schlumberger Limited (SLB - Free Report) has reported third-quarter 2022 earnings of 63 cents per share (excluding charges and credits), comfortably beating the Zacks Consensus Estimate of 55 cents. The bottom line significantly increased from the year-ago quarter’s earnings of 36 cents.
The oilfield service giant recorded total quarterly revenues of $7,477 million, outpacing the Zacks Consensus Estimate of $7,143 million. The top line also improved from the year-ago quarter’s $5,847 million.
Halliburton in Focus
On Oct 25,Halliburton Company (HAL - Free Report) reported third-quarter 2022 adjusted net income per share of 60 cents, surpassing the Zacks Consensus Estimate of 56 cents and improving from the year-ago profit of 28 cents. The outperformance reflects stronger-than-expected profit from both its divisions and came in spite of the company’s exit from Russia.
Revenues of $5.4 billion were 38.8% higher than the corresponding period of 2021 and above the Zacks Consensus Estimate of $5.3 billion. North American revenues rose 63.2% year over year to $2.6 billion, while revenues from Halliburton’s international operations were up 21.2% from the year-ago period to $2.7 billion. Investors should know that HAL has outsized exposure to the North American land drilling market.
Market Impact
Investors might want to know the impact of earnings results on ETFs that are heavily invested in these popular oil service companies. Below we highlight three oil-services ETFs with considerable allocation to SLB and HAL that could be in focus:
VanEck Vectors Oil Services ETF (OIH - Free Report)
OIH invests $2.79 billion of assets in 25 holdings and devotes as much as 22.45% of the portfolio weight to SLB, followed by 11.48% in HAL. Generally, when one stock accounts for as much as 20% of an ETF's weight, its individual performance decides much of the fund’s price movement. OIH gained 13.8% in the past five days (as of Oct 26, 2022).
iShares US Oil Equipment & Services ETF (IEZ - Free Report)
This ETF invests about $200.0 million of assets in about 26 securities, focusing solely on the energy world. The in-focus SLB takes up the first position here with 24.94% of holdings. HAL takes up the second position with about 21.28% of total assets. The fund added 14.7% in the past five days.
Energy Select Sector SPDR Fund (XLE - Free Report)
XLE invests about $41.62 billion of assets in 23 stocks. The fund puts 5.11% of the portfolio weight in SLB. It added about 7.2% in the past five days.