Halliburton versus peers and industry
Halliburton (HAL), the second-largest oilfield services and equipment (or OFS) provider by market capitalization, has had a steady run in the stock market in 2016. On September 2, 2016, HAL was trading at $43.92. This was ~26% higher than at the beginning of the year.
The VanEck Vectors Oil Services ETF (OIH), a tracking index of 25 OFS companies, has risen 4% year-to-date. HAL makes up 15.7% of OIH. Oil States International (OIS), HAL’s smaller market-cap peer, has risen 10% in the same period. The price of West Texas Intermediate crude oil has increased 23% during this period.
What does Halliburton’s share price movement tell us?
Halliburton’s share price has trended upward since January 2016. Its quarterly revenues and net income in the past four quarters have persistently stayed weak. Its cash flow, which showed improvement in 4Q15 over the previous quarter, deteriorated sharply in the following two quarters. Since the third week of January, when HAL’s share price reached its one-year low, it has recovered 52%, led by the crude oil price recovery.
Halliburton’s moving averages
On September 2, 2016, Halliburton’s share price was at a 2% discount to its 50-day moving average (or DMA). It’s trading 12% above its 200-DMA.
Moving averages exhibit a smoother trend following the movement of a stock price. A 50-DMA is a short-term MA (moving average), while a 200-DMA shows a long-term trend. HAL’s short-run MA crossed over the long-run MA in May.
HAL’s share price has also been trading above its long-run MA since the second week of April. This indicates a bullishness in HAL’s share price. It can also reflect the merger termination with Baker Hughes (BHI), which had been a dark cloud over HAL shares since November 2014.
In this series, we’ll take a close look at Halliburton’s top-line and bottom-line growth, its balance sheet, and its free cash flow. We’ll also look at its dividends, industry value drivers, and valuation multiples.
Let’s start by seeing what HAL management has to say.