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Analysts Expect Weak 3Q15 Earnings for Halliburton

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Oct. 9 2015, Updated 8:09 a.m. ET

Halliburton’s quarterly earnings per share

We discussed analysts’ estimates for Halliburton’s (HAL) 3Q15 revenues in the previous part of the series. In this article, we’ll discuss Halliburton’s 3Q15 earnings per share and estimates.

In 3Q15, analysts expect $0.29 adjusted earnings per share (or EPS) for Halliburton. This is 35% lower than its 2Q15 adjusted EPS, and 76% lower than its 3Q14 earnings. Weaker crude oil prices and lower spending by North American upstream energy producers will continue to take their toll on oilfield service companies like Halliburton in 3Q15.

Halliburton posted strong earnings growth from 1Q13 through 4Q14. Between 1Q13 and 4Q14, its adjusted EPS increased 78%. But the crude oil price fall sent its 1Q15 adjusted EPS crashing ~59% from the previous quarter. In 2Q15, it fell by another 10%.

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Halliburton’s earnings versus estimates

In 2Q15, adjusted EPS exceeded analysts’ consensus EPS by 52%. In 2Q15, the company recorded $643 million (pre-tax) in impairment charges and Baker Hughes (BHI) acquisition-related charges. Including the costs of various other one-time items, the company’s net income fell to $54 million in 2Q15 versus a $774 million net income in 2Q14.

As noted in the graph above, Halliburton’s adjusted EPS has exceeded estimates in many quarters in the past. On average, adjusted EPS exceeded consensus EPS by ~9% in the past ten quarters.

Core Laboratories (CLB), Halliburton’s peer in the oilfield services and equipment provider industry, recorded $34.6 million in 2Q15 net income compared to Halliburton’s $54 million. Analysts expect Core Laboratories’s 3Q15 earnings to improve marginally to $0.83 per share compared to its adjusted 2Q15 EPS of $0.82.

In 3Q14, however, Core Laboratories’s adjusted earnings were $1.41 per share. The company constitutes 0.36% of the Vanguard Energy ETF (VDE).

Next, we will discuss Halliburton’s asset sales initiatives and free cash flows.

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