Halliburton versus peers and industry
Halliburton Company (HAL), the second-largest oilfield equipment and services (or OFS) provider by market capitalization (market cap), has had a fair run in the stock market in 2016. On May 20, 2016, HAL was trading at $40.91. This was ~19% higher than its price at the beginning of the year.
The VanEck Vectors Oil Services ETF (OIH), an ETF that tracks an index of 25 OFS companies, has risen by 2% year-to-date. National Oilwell Varco (NOV), HAL’s smaller market cap peer, has fallen 8% during the same period. West Texas Intermediate (or WTI) crude oil’s price has risen 30% during the period.
What does Halliburton’s share price movement tell us?
Halliburton’s share price has been trending downward since June 2015. HAL’s quarterly revenues and net incomes in the past four quarters have persistently been weak. Its cash flow, which improved in 4Q15 over the previous quarter, fell sharply in 1Q16.
Since the third week of January, when it reached its one-year low, HAL’s share price has recovered 44%. This recovery was led by crude oil’s price recovery. HAL makes up 0.4% of the iShares S&P 500 Value ETF (IVE).
Halliburton’s moving averages
On May 20, Halliburton’s share price was at a 7.4% premium to its 50-day moving average. It was also trading 12% above its 200-day moving average.
Moving averages exhibit a smoother trend following a stock’s price movements. A 50-day moving average is a short-term moving average, while a 200-day moving average shows a long-term trend. HAL’s short-term moving average has stayed below its long-term moving average for a large part of the past year.
However, in the second week of May, HAL’s short-term moving average crossed over its long-term moving average. HAL’s share price has also been trading above its long-term moving average since the second week of April. This indicates bullishness in HAL’s share price. It also reflects the company’s merger termination with Baker Hughes (BHI), which had been an overhang on HAL’s share price since November 2014.
In this series, we’ll analyze Halliburton’s top line and bottom line growth, its balance sheet, free cash flow, dividends, and valuation multiples. We’ll start with its management’s comments.