24 Oct

Will Halliburton’s Returns Improve after 3Q17?

WRITTEN BY Alex Chamberlin

Halliburton’s stock price reaction

Halliburton (HAL) released its financial results for 3Q17 on October 23. On that day, HAL’s stock price reacted negatively, falling 2.5% to $42.24 from the previous day’s close. Despite earnings beating estimates, muted growth in some of HAL’s international operations and deceleration in the US rig count in the past month have stirred up some uncertainty toward HAL’s outlook. This impact could have dragged on HAL’s stock price yesterday. Now, HAL’s stock price is 12% down compared to a year ago.

Schlumberger (SLB), which released its 3Q17 financial results on October 20, saw a 2% fall in its stock price on the day of the earnings release. The SPDR S&P 500 ETF (SPY) fell 0.4% on October 23 compared to the previous day’s close. The VanEck Vectors Oil Services ETF (OIH) fell 2% on the same day.Will Halliburton’s Returns Improve after 3Q17?

Halliburton’s returns versus the industry

As the graph above shows, in the past year, HAL has outperformed the VanEck Vectors Oil Services ETF (OIH), which has fallen 22%. The Energy Select Sector SPDR ETF (XLE), the broader energy industry ETF, has given -4% returns since October 24, 2016. Halliburton, however, underperformed the SPDR S&P 500 ETF (SPY), which has generated 19% returns during the same period. The Dow Jones Industrial Average (DJIA-INDEX) rose 28% in the past year. The energy sector makes up 6.0% of the Dow Jones Industrial Average.

Stock price movement for HAL’s peers

Since October 24, 2016, Baker Hughes, a GE Company (BHGE), fell 13% while CARBO Ceramics (CRR) saw its stock price fall 36%.

Is Halliburton’s management optimistic?

Halliburton’s management expressed confidence over its performance in North America while emphasizing the steady performance of its international operations. Jeff Miller, Halliburton’s president and CEO, commented in the 3Q17 earnings press release, “Our North American business is hitting on all cylinders and our international business proved resilient in a challenging environment.” Learn more about the energy market in Market Realist’s Your Energy Sector Recap for Last Week.

Next, we’ll discuss Wall Street analysts’ targets for Halliburton.

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