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Halliburton Stock Rose 6 Percent Due to Earnings Surprise

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Halliburton stock has risen as much as 5.50 percent in the pre-market session today as of 8:39 a.m. ET. The stock rose after the oilfield services company posted its second-quarter results before the market bell. Although the earnings beat analysts’ expectations, the company’s total revenues were below the estimates.

Halliburton’s Q2 earnings

In the second quarter, Halliburton reported an adjusted EPS of $0.05 compared to $0.35 in the second quarter of 2019. The adjusted EPS beat analysts’ consensus estimate of -$0.11. Halliburton generated sales of $3.2 billion—a reduction of 46.1 percent from the second quarter of 2019. The company missed analysts’ consensus sales estimate of $3.3 billion. Halliburton’s North America revenues fell by 68.5 percent YoY (year-over-year) to $1.05 billion in the second quarter—lower than analysts’ consensus estimate of $1.08 billion.

The revenue from Halliburton’s Completion and Production segment fell by 56.1 percent YoY to $1.67 billion—lower than analysts’ consensus estimate of $1.70 billion. In the second quarter, the Completion and Production segment represented 52.3 percent of the company’s overall revenue. In the second quarter of 2019, the segment accounted for 64.2 percent of Halliburton’s total revenue.

The revenue from Halliburton’s Drilling and Evaluation segment fell by 28.3 percent YoY to $1.52 billion—lower than analysts’ consensus estimate of $1.62 billion. In the second quarter, the Drilling and Evaluation segment represented 47.7 percent of the company’s overall revenue. The segment accounted for 35.8 percent of Halliburton’s total revenue in the second quarter of 2019.

In the second-quarter earnings release, Halliburton CEO Jeff Miller said, “Halliburton’s second quarter performance in a tough market shows we can execute quickly and aggressively to deliver solid financial results and free cash flow despite a severe drop in global activity. Our results demonstrate a significant and sustainable reset to the power of our business to generate positive earnings and free cash flow.” Miller also said, “The strategic actions we are taking will further boost our earnings power and ability to generate free cash flow as we power into and win the eventual recovery.”

Halliburton’s growth projections

Analysts expect Halliburton’s revenues to fall by 34.9 percent YoY in 2020 to $14.6 billion. The sales will likely fall by 10.3 percent YoY in 2021 to $13.1 billion. The adjusted earnings could fall from $1.24 per share in 2019 to -$0.05 per share in 2020. However, the adjusted earnings will likely fall to -$0.17 per share in 2021.

Analysts’ recommendations and target price

Among the 30 analysts tracking Halliburton stock, ten recommend a buy—up from nine in the previous month. Eighteen analysts recommend a hold—down from 19 in the previous month. Two analysts recommend a sell—unchanged from the previous month. Analysts have an average target price of $12.33 on Halliburton. The target price implies a return of -5.7 percent based on the closing price of $13.08 on July 17. The consensus target price for the stock has risen from $10.49 in June—a rise of 17.5 percent.

Halliburton's stock performance

Halliburton stock fell 0.1 percent on July 17 and ended the day at $13.08. At this closing price, the company’s market cap is $11.5 billion. The stock is trading 48.7 percent below its 52-week high of $25.47 and 207.8 percent above its 52-week low of $4.25. The stock has fallen by 46.6 percent year-to-date.

On July 17, Halliburton stock was trading 3.9 percent above its 20-day moving average of $12.59. The stock is trading 5.2 percent above its 50-day moving average of $12.43 and 22.9 percent above its 100-day moving average of $10.64.

Halliburton has a lower Bollinger Band level of $11.63, while its middle Bollinger Band level is $12.55. On July 17, the stock closed near its upper Bollinger Band level of $13.46, which suggests that it is overbought.

At 9:33 a.m. ET today, the S&P futures rose 0.11 percent and the Dow futures rose 0.02 percent. Billionaires have been selling stocks. Is this a market crash warning? 

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