In 3Q16, analysts expect an adjusted loss per share of $0.07 for Halliburton (HAL). Wall Street analysts expect Halliburton’s adjusted earnings to stay negative in the coming quarter, but improve from the adjusted loss of $0.14 per share in 2Q16. Steady upstream activities in the Middle East and the expected recovery in North America, once the rig count stabilizes, can drive Halliburton’s 3Q16 earnings. However, persistent pricing pressure and lower drilling activity in some of Halliburton’s international operations can add to the company’s problem. Halliburton is expected to hold its 3Q16 earnings conference call on October 19.
Earlier, the falling rig count sent Halliburton’s 1Q15 adjusted EPS (earnings per share) crashing 59% compared to the previous quarter. Since then, Halliburton’s earnings haven’t recovered. From 2Q15 through 2Q16, the adjusted earnings turned negative. It shows the difficult energy market environment.
Halliburton’s earnings versus estimates
In 2Q16, Halliburton’s adjusted EPS exceeded analysts’ consensus EPS. As noted in the above graph, Halliburton’s adjusted EPS exceeded estimates in many quarters in the past. On average, the adjusted EPS exceeded the consensus EPS by ~10% in the past 13 quarters.
In comparison, analysts expect Superior Energy Services’ (SPN) 3Q16 adjusted earnings to deteriorate to -$0.57 per share—compared to its 2Q16 adjusted earnings of -$0.53. Superior Energy Services’ market capitalization stands at ~$2.7 billion—compared to Halliburton’s $38.4 billion. Halliburton accounts for 0.06% of the iShares Core Growth Allocation ETF (AOR). AOR has 62% exposure to equity and 38% exposure to fixed income securities. Read Has Halliburton Found Its Footing after the Baker Hughes Breakup? to learn more.
Next, we’ll discuss how much the US rig count impacts Halliburton’s North America operations.