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Does Halliburton Have a Brighter Outlook for Q2 2018?

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Halliburton, crude oil prices, and US rigs

From June 8, 2017, to June 7, 2018, Halliburton (HAL) stock has risen 11%. We analyzed some factors affecting HAL in Market Realist’s Why Halliburton Stock Is Showing Some Strength.

In the same period, the price of WTI crude oil has risen 45%. You can read the latest on crude oil prices in Market Realist’s Decoding the Energy Sector and the S&P 500 on June 6. Led by the rise in the price of crude oil, the US rig count has increased 16% in the past year.

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Returns from Halliburton’s peers and the industry

The rise in the price of crude oil and the US rig count have also affected Halliburton’s peers, including Baker Hughes, a GE Company (BHGE) and National Oilwell Varco (NOV). HAL outperformed BHGE but underperformed NOV in the past year. BHGE had a one-year return of -8.4%, and NOV returned 31.5% in the same period. Read how the top oilfield equipment and services companies have been performing in BHGE and NOV’s Performances Compared to the Industry.

The Energy Select Sector SPDR ETF (XLE), the broader energy industry ETF, has risen 19% since June 8, 2017. HAL also outperformed the VanEck Vectors Oil Services ETF (OIH), which has generated 9.5% returns in that period. OIH tracks an index of 25 oilfield equipment and services companies.

Halliburton’s outlook for Q2 2018

In its Drilling and Evaluation division, Halliburton expects its revenues and margins for the second quarter to be similar to the first quarter. Gains from the increase in international upstream activity may be offset by continued pricing pressure in the international market.

In its Completion and Production division, HAL’s management expects strong revenue and margin growth in the second quarter. That could be driven by a strengthening North American market. In the first quarter, HAL’s revenues from North America increased 3% sequentially.

Series highlights

In this series, we’ll analyze Halliburton’s relative valuation, what the market indicators are saying about HAL stock, and what Wall Street analysts are recommending for Halliburton.

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