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Why Is Halliburton (HAL) Down 10.8% 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 lost about 10.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Halliburton due for a breakout? 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 Q4 Earnings Beat Estimates
Halliburton Company reported fourth-quarter 2022 adjusted net income per share of 72 cents, surpassing the Zacks Consensus Estimate of 67 cents and well above the year-ago quarter profit of 36 cents (adjusted). The outperformance reflects stronger-than-expected profit from both its divisions.
Meanwhile, revenues of $5.6 billion were 30.5% higher than the corresponding period of 2021 and also came just ahead of the Zacks Consensus Estimate (by some $3 million). North American revenues rose 46.4% year over year to $2.6 billion, while revenues from Halliburton’s international operations were up 19.1% from the year-ago period to nearly $3 billion. Investors should know that HAL has outsized exposure to the North American land drilling market.
In more good news for investors, Halliburton raised its quarterly dividend by 33.3% to 16 cents per share (or 64 cents per share annualized).
Inside Halliburton’s Segments
Operating income from the Completion and Production segment was $659 million, 89.9% above the year-ago level of $347 million and ahead of the Zacks Consensus Estimate of $629 million. The division’s performance was buoyed by improving completion tool sales as well as cementing activity globally, to go with the strength in the pressure pumping business in North America onshore.
Drilling and Evaluation unit profit surged from $269 million in the fourth quarter of 2021 to $387 million in the corresponding period of 2022. The division also managed to beat the Zacks Consensus Estimate of $364 million. This was primarily due to a pickup in international drilling-associated services, testing services, and year-end software sales in, as well as increased project management activity in Mexico.
Balance Sheet
Halliburton reported fourth-quarter capital expenditure of $350 million. For the full-year, HAL’s spending totaled $1 billion. As of Dec 31, 2022, the company had approximately $2.3 billion in cash/cash equivalents and $7.9 billion in long-term debt, representing a debt-to-capitalization ratio of 49.8.
Management Remarks & Outlook
Halliburton — the world’s biggest provider of hydraulic fracking — noted that the strong fourth-quarter (and 2022) performance is a thumbs-up to its solid execution and strategic priorities in North America as well as international markets. Looking ahead, the company expects this recipe to drive strong margins home and away throughout this year and beyond. Looking ahead, Halliburton sees international region to deliver profitable growth, while optimizing value in its core north American market.
Overall, Halliburton believes that its smart strategy, digital leadership, capital efficiency, and the global presence points to a rosy outlook. The Houston-based company’s cash flow generation capabilities and balance sheet strength should also ensure increased shareholder returns, as evinced by its recent dividend hike.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
VGM Scores
At this time, Halliburton has a great Growth Score of A, though it is lagging a lot 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 A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly 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) Down 10.8% Since Last Earnings Report?
It has been about a month since the last earnings report for Halliburton (HAL - Free Report) . Shares have lost about 10.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Halliburton due for a breakout? 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 Q4 Earnings Beat Estimates
Halliburton Company reported fourth-quarter 2022 adjusted net income per share of 72 cents, surpassing the Zacks Consensus Estimate of 67 cents and well above the year-ago quarter profit of 36 cents (adjusted). The outperformance reflects stronger-than-expected profit from both its divisions.
Meanwhile, revenues of $5.6 billion were 30.5% higher than the corresponding period of 2021 and also came just ahead of the Zacks Consensus Estimate (by some $3 million). North American revenues rose 46.4% year over year to $2.6 billion, while revenues from Halliburton’s international operations were up 19.1% from the year-ago period to nearly $3 billion. Investors should know that HAL has outsized exposure to the North American land drilling market.
In more good news for investors, Halliburton raised its quarterly dividend by 33.3% to 16 cents per share (or 64 cents per share annualized).
Inside Halliburton’s Segments
Operating income from the Completion and Production segment was $659 million, 89.9% above the year-ago level of $347 million and ahead of the Zacks Consensus Estimate of $629 million. The division’s performance was buoyed by improving completion tool sales as well as cementing activity globally, to go with the strength in the pressure pumping business in North America onshore.
Drilling and Evaluation unit profit surged from $269 million in the fourth quarter of 2021 to $387 million in the corresponding period of 2022. The division also managed to beat the Zacks Consensus Estimate of $364 million. This was primarily due to a pickup in international drilling-associated services, testing services, and year-end software sales in, as well as increased project management activity in Mexico.
Balance Sheet
Halliburton reported fourth-quarter capital expenditure of $350 million. For the full-year, HAL’s spending totaled $1 billion. As of Dec 31, 2022, the company had approximately $2.3 billion in cash/cash equivalents and $7.9 billion in long-term debt, representing a debt-to-capitalization ratio of 49.8.
Management Remarks & Outlook
Halliburton — the world’s biggest provider of hydraulic fracking — noted that the strong fourth-quarter (and 2022) performance is a thumbs-up to its solid execution and strategic priorities in North America as well as international markets. Looking ahead, the company expects this recipe to drive strong margins home and away throughout this year and beyond. Looking ahead, Halliburton sees international region to deliver profitable growth, while optimizing value in its core north American market.
Overall, Halliburton believes that its smart strategy, digital leadership, capital efficiency, and the global presence points to a rosy outlook. The Houston-based company’s cash flow generation capabilities and balance sheet strength should also ensure increased shareholder returns, as evinced by its recent dividend hike.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
VGM Scores
At this time, Halliburton has a great Growth Score of A, though it is lagging a lot 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 A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly 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.