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Why Is Halliburton (HAL) Up 14.9% Since Last Earnings Report?
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It has been about a month since the last earnings report for Halliburton (HAL - Free Report) . Shares have added about 14.9% in that time frame, outperforming 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 drivers.
Halliburton Q2 Earnings Top Estimates, Revenues Miss
Halliburton Company delivered better-than-expected second-quarter 2020 earnings as both the Completion and Production segment and the Drilling and Evaluation segment outperformed the Zacks Consensus Estimate.
The company reported earnings of 5 cents per share. The Zacks Consensus Estimate was of a loss of 11 cents per share.
However, the bottom line tumbled 85.7% from the year-ago figure of 35 cents per share due to lower revenue contribution from North America activities.
Operating loss of $1.9 billion was against $303 million of operating income in the same period last year.
Revenues of $3.2 billion slumped 46% from the year-ago quarter’s sales and also missed the Zacks Consensus Estimate of $3.26 billion. Further, North America revenues plunged 68.5% year over year to $1 billion. Moreover, revenues from Halliburton’s international operations fell 19.2% from the year-ago period to $2.1 billion.
Outlook
Management at this world’s biggest provider of hydraulic fracking noted that although the activity levels in North America during the June quarter ramped down, the company continues to benefit from the changing market dynamics through an excellent execution and regulation of the controllable factors.
Even as the company relentlessly battles against a challenging business landscape in North America, it is looking to boost free cash flow generation and improve returns. This Houston, TX-based industry player maintains an efficient North America service delivery improvement strategy, a prudent capital management policy and a responsible and competent team. The steady deployment of cutting-edge digital technologies will enhance Halliburton’s efficiency and aid its cost-saving efforts to bode well both for the company as well as its customers. Importantly, Halliburton will not only gain traction from its key concerted efforts but also continue to monitor the commodity price movement, further adjusting itself to the revised capex plans in response to a volatile price scenario.
Segmental Performance
Operating income from the Completion and Production segment came in at $159 million, significantly dropping 66.2% from the year-ago level of $470 million but beating the Zacks Consensus Estimate of $23.77 million.
The division’s performance was affected by weakness in pressure pumping activity, primarily in U.S. land and Latin America along with lower artificial lift activity in U.S. land. These negative impacts were partly offset by improved completion tool sales, internationally.
Drilling and Evaluation unit profit declined from $145 million in the second quarter of 2019 to $127 million in the corresponding period of 2020 due to a global reduction in drilling-related services and weak software sales, internationally. However, the segmental income outperformed the Zacks Consensus Estimate of $94 million.
Balance Sheet
Halliburton’s capital expenditure in the second quarter was $142 million. As of Jun 30, 2020, the company had $1.81 billion in cash/cash equivalents and $9.64 billion in long-term debt, representing a total debt-to-total capitalization of 65%.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 169.9% due to these changes.
VGM Scores
Currently, Halliburton has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Halliburton has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Why Is Halliburton (HAL) Up 14.9% Since Last Earnings Report?
It has been about a month since the last earnings report for Halliburton (HAL - Free Report) . Shares have added about 14.9% in that time frame, outperforming 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 drivers.
Halliburton Q2 Earnings Top Estimates, Revenues Miss
Halliburton Company delivered better-than-expected second-quarter 2020 earnings as both the Completion and Production segment and the Drilling and Evaluation segment outperformed the Zacks Consensus Estimate.
The company reported earnings of 5 cents per share. The Zacks Consensus Estimate was of a loss of 11 cents per share.
However, the bottom line tumbled 85.7% from the year-ago figure of 35 cents per share due to lower revenue contribution from North America activities.
Operating loss of $1.9 billion was against $303 million of operating income in the same period last year.
Revenues of $3.2 billion slumped 46% from the year-ago quarter’s sales and also missed the Zacks Consensus Estimate of $3.26 billion. Further, North America revenues plunged 68.5% year over year to $1 billion. Moreover, revenues from Halliburton’s international operations fell 19.2% from the year-ago period to $2.1 billion.
Outlook
Management at this world’s biggest provider of hydraulic fracking noted that although the activity levels in North America during the June quarter ramped down, the company continues to benefit from the changing market dynamics through an excellent execution and regulation of the controllable factors.
Even as the company relentlessly battles against a challenging business landscape in North America, it is looking to boost free cash flow generation and improve returns. This Houston, TX-based industry player maintains an efficient North America service delivery improvement strategy, a prudent capital management policy and a responsible and competent team. The steady deployment of cutting-edge digital technologies will enhance Halliburton’s efficiency and aid its cost-saving efforts to bode well both for the company as well as its customers. Importantly, Halliburton will not only gain traction from its key concerted efforts but also continue to monitor the commodity price movement, further adjusting itself to the revised capex plans in response to a volatile price scenario.
Segmental Performance
Operating income from the Completion and Production segment came in at $159 million, significantly dropping 66.2% from the year-ago level of $470 million but beating the Zacks Consensus Estimate of $23.77 million.
The division’s performance was affected by weakness in pressure pumping activity, primarily in U.S. land and Latin America along with lower artificial lift activity in U.S. land. These negative impacts were partly offset by improved completion tool sales, internationally.
Drilling and Evaluation unit profit declined from $145 million in the second quarter of 2019 to $127 million in the corresponding period of 2020 due to a global reduction in drilling-related services and weak software sales, internationally. However, the segmental income outperformed the Zacks Consensus Estimate of $94 million.
Balance Sheet
Halliburton’s capital expenditure in the second quarter was $142 million. As of Jun 30, 2020, the company had $1.81 billion in cash/cash equivalents and $9.64 billion in long-term debt, representing a total debt-to-total capitalization of 65%.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 169.9% due to these changes.
VGM Scores
Currently, Halliburton has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Halliburton has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.