Does Halliburton’s Valuation Present an Attractive Opportunity?



Halliburton’s PE trend

Halliburton’s forward PE is positive, reflecting analysts’ expectation of positive earnings for the next four quarters. Halliburton makes up 3.7% of the SPDR S&P Oil & Gas Equipment & Services ETF (XES). From December 30, 2016, to December 29, 2017, XES dropped 23%.

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Halliburton’s price-to-cash-flow multiple

Halliburton’s price-to-cash-flow multiple was higher in 2017 than the past eight-year average. HAL’s forward price-to-cash-flow multiple is lower than its 2017 price-to-cash-flow multiple, which reflects analysts’ expectations of higher cash flows in the next four quarters.

Halliburton’s EV-to-EBITDA trend

In 2017, HAL’s enterprise value (or EV) decreased over 2016, as HAL’s stock price declined during the same period. Also, HAL’s EBITDA (earnings before interest, tax, depreciation, and amortization) increased in 2017 over 2016. So, the EV-to-EBITDA multiple deflated in 2017 compared to 2016. HAL’s EV-to-EBITDA multiple in 2017 was higher than its past eight-year average EV-to-EBITDA multiple.

HAL’s forward EV-to-EBITDA multiple is lower than its 2017 EV-to-EBITDA multiple, reflecting analysts’ expectation of higher EBITDA in the next four quarters.

EV-to-EBITDA multiple for HAL’s peers

Baker Hughes’s (BHGE) forward EV-to-EBITDA is 9.8x. Key Energy Services’ (KEG) forward EV-to-EBITDA multiple is 11.6x. Patterson-UTI Energy’s (PTEN) forward EV-to-EBITDA multiple is 5.4x.

Next, we’ll discuss Halliburton’s valuation compared to its industry peers.


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