Halliburton Company (HAL Quick QuoteHAL - Free Report) is set to release fourth-quarter results on Jan. 22. The Zacks Consensus Estimate for the to-be-reported quarter is pegged at a profit of 70 cents per share on revenues of $5.6 billion.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

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

Highlights of Q3 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 missed the consensus mark, reflecting subdued performance in the North American region and the effects of the August cyberattack incident. Halliburton reported adjusted net income per share of 73 cents, below the Zacks Consensus Estimate of 75 cents. Revenues of $5.7 billion also missed the Zacks Consensus Estimate by some $128 million.

HAL beat the Zacks Consensus Estimate in two of the last four quarters, missed in one and met in the other, with the average earnings surprise being 1.9%. This is depicted in the graph below:

The Zacks Consensus Estimate for the fourth-quarter bottom line has been unchanged in the past seven days. The estimated figure indicates an 18.6% fall year over year. The Zacks Consensus Estimate for revenues, meanwhile, suggests a 1.7% decrease from the year-ago period.

Factors to Consider

After bouncing back strongly from the depths of the pandemic, the oil and natural gas rig count in the United States has gradually declined over the past year. Consequently, drilling activity — an important factor for services companies — has hit a speed bump. In the United States, a region on which Halliburton is highly dependent, the rig count has decreased around 18% from a year ago. The steady decline in rig count is worrying for contracting activity.

Consequently, our expectation for fourth-quarter revenues for the North American region is pegged at $2.2 billion, indicating a 7.6% decline from the year-ago quarter due to a soft operating environment. This is likely to have weighed on the company’s earnings and cash flows.

The increase in HAL’s costs might have dragged down the company’s to-be-reported bottom line. Going by our model, the company’s fourth-quarter cost of services is likely to have totaled $3.4 billion, up 3.2% from the year-ago period. The upward cost trajectory could be attributed to the delay in the implementation of the SAP S4 project.

But giving some respite to the company, our projection for the fourth-quarter sales in the Middle East/Asia region is pegged at $1.6 billion, indicating a 7.4% improvement from the year-ago quarter on the back of Halliburton’s increased pressure pumping deliveries, helped by the company’s strategic positioning in key markets and its capability to capitalize on regional demand surges.

What Does Our Model Say?

The proven Zacks model does not conclusively predict an earnings beat for Halliburton for the fourth quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of a beat. But that’s not the case here.

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

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is -0.73%.

Zacks Rank: HAL currently carries a Zacks Rank #5 (Strong Sell).

Stocks to Consider

While an earnings beat looks uncertain for Halliburton, here are some firms from the energy space that you may want to consider on the basis of our model:

Kinder Morgan (KMI Quick QuoteKMI - Free Report) has an Earnings ESP of +0.76% and a Zacks Rank #3. The firm is scheduled to release earnings on Jan. 22.

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

Notably, the Zacks Consensus Estimate for Kinder Morgan’s 2025 earnings per share indicates 4.8% year-over-year growth. Valued at around $65.4 billion, KMI has gained 83.8% in a year.

Murphy Oil Corporation (MUR Quick QuoteMUR - Free Report) has an Earnings ESP of +0.53% and a Zacks Rank #3. The firm is scheduled to release earnings on Jan. 30.

Notably, the Zacks Consensus Estimate for Murphy Oil’s 2025 earnings per share indicates 18.2% year-over-year growth. Valued at around $4.9 billion, MUR has lost 11.2% in a year.

Chevron Corporation (CVX Quick QuoteCVX - Free Report) has an Earnings ESP of +0.17% and a Zacks Rank #3. The firm is scheduled to release earnings on Jan. 31.

Notably, the Zacks Consensus Estimate for Chevron’s 2025 earnings per share indicates 7.4% year-over-year growth. Valued at around $284.5 billion, CVX has gained 17.2% in a year.