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Is Halliburton Company (HAL) a Good Stock to Pick Right Now?
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Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put, Halliburton Company (HAL - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Halliburton Company has a trailing twelve months PE ratio of 6.62, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 compares in at about 17.39. If we focus on the stock’s long-term PE trend, the current level Halliburton Company puts current PE ratio below its midpoint (which is 17.96) over the past five years.
Also, the stock’s PE compares favorably with the Zacks Oils-Energy sector’s trailing twelve months PE ratio, which stands at 10.19. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Halliburton Company has a forward PE ratio (price relative to this year’s earnings) of 14.05, so it is fair to expect an increase in the company's share price in the near future.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, the stock has a P/S ratio of about 0.32. This is substantially lower than the S&P 500 average, which comes in at 3.02 right now. Also, as we can see in the chart below, this is slightly below the highs for this stock in particular over the past few years.
If anything, this suggests some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, Halliburton Company currently has a Value Style Score of A, putting it into the top 20% of all stocks we cover from this look. This makes HAL a solid choice for value investors and some of its other metrics make it clear too.
For example, the PEG ratio for Halliburton Company is just 1.35 a level that is slightly lower than the industry average of 2.28. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate.
What About the Stock Overall?
Though Halliburton Company might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of B and a Momentum score of D. This gives HAL a VGM score—or its overarching fundamental grade—of A. (You can read more about the Zacks Style Scores here >>).
Meanwhile, the company’s recent earnings estimates have been disappointing. The current year has seen five estimates go lower in the past sixty days and one higher, while full-year 2020 estimate has seen seven downward and no upward revision in the same time period.
This has had a noticeable impact on the consensus estimate. The current year consensus estimate has declined 45.8% in the past two months, while the full-year 2020 estimate has fallen 91.2% in the same time period. You can see the consensus estimate trend and recent price action for the stock in the chart below:
This negative trend is why the stock has just a Zacks Rank #3 (Hold) and why we are looking for in-line performance from the company in the near term.
Bottom Line
Halliburton Company is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. However with a sluggish industry rank (bottom 27% out of more than 250 stocks) and a Zacks Rank #3 , it is hard to get too excited about this company overall. In fact, over the past one year, the sector has clearly underperformed the broader market, as you can see below:
So, value investors might want to wait for estimates, analyst sentiment and broader factors to turn around in this name first, but once that happens, this stock could be a compelling pick.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.5% per year.
These 7 were selected because of their superior potential for immediate breakout.
Image: Bigstock
Is Halliburton Company (HAL) a Good Stock to Pick Right Now?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put, Halliburton Company (HAL - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Halliburton Company has a trailing twelve months PE ratio of 6.62, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 compares in at about 17.39. If we focus on the stock’s long-term PE trend, the current level Halliburton Company puts current PE ratio below its midpoint (which is 17.96) over the past five years.
Also, the stock’s PE compares favorably with the Zacks Oils-Energy sector’s trailing twelve months PE ratio, which stands at 10.19. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Halliburton Company has a forward PE ratio (price relative to this year’s earnings) of 14.05, so it is fair to expect an increase in the company's share price in the near future.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, the stock has a P/S ratio of about 0.32. This is substantially lower than the S&P 500 average, which comes in at 3.02 right now. Also, as we can see in the chart below, this is slightly below the highs for this stock in particular over the past few years.
If anything, this suggests some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, Halliburton Company currently has a Value Style Score of A, putting it into the top 20% of all stocks we cover from this look. This makes HAL a solid choice for value investors and some of its other metrics make it clear too.
For example, the PEG ratio for Halliburton Company is just 1.35 a level that is slightly lower than the industry average of 2.28. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate.
What About the Stock Overall?
Though Halliburton Company might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of B and a Momentum score of D. This gives HAL a VGM score—or its overarching fundamental grade—of A. (You can read more about the Zacks Style Scores here >>).
Meanwhile, the company’s recent earnings estimates have been disappointing. The current year has seen five estimates go lower in the past sixty days and one higher, while full-year 2020 estimate has seen seven downward and no upward revision in the same time period.
This has had a noticeable impact on the consensus estimate. The current year consensus estimate has declined 45.8% in the past two months, while the full-year 2020 estimate has fallen 91.2% in the same time period. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Halliburton Company Price and Consensus
Halliburton Company price-consensus-chart | Halliburton Company Quote
This negative trend is why the stock has just a Zacks Rank #3 (Hold) and why we are looking for in-line performance from the company in the near term.
Bottom Line
Halliburton Company is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. However with a sluggish industry rank (bottom 27% out of more than 250 stocks) and a Zacks Rank #3 , it is hard to get too excited about this company overall. In fact, over the past one year, the sector has clearly underperformed the broader market, as you can see below:
So, value investors might want to wait for estimates, analyst sentiment and broader factors to turn around in this name first, but once that happens, this stock could be a compelling pick.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.5% per year.
These 7 were selected because of their superior potential for immediate breakout.
See these time-sensitive tickers now >>