Will Halliburton (HAL) Deliver Robust Results in Q3 Too?


This story originally appeared on Zacks

Halliburton Company HAL is set to release third-quarter 2021 results before the opening bell on Oct 19. The current Zacks Consensus Estimate for the to-be-reported quarter is 28 cents per share on revenues of $3.9 billion.
Let’s delve into the factors that might have influenced the oilfield service company’s performance in the September quarter. But it’s worth taking a look at Halliburton’s previous-quarter performance first.

– Zacks

Highlights of Q2 Earnings & Surprise History

In the last-reported quarter, this Houston, TX-based provider of technical products and services to drillers of oil and gas wells beat the consensus mark as the Completion and Production segment as well as the Drilling and Evaluation segment outperformed the Zacks Consensus Estimate. Halliburton had reported net income per share of 26 cents that went past the Zacks Consensus Estimate of 22 cents. But the company’s quarterly revenues of $3.7 billion underperformed the Zacks Consensus Estimate by 1.1% due to lower-than-expected North America revenues.
As far as earnings surprises are concerned, Halliburton beat the Zacks Consensus Estimate in each of the last four quarters, delivering an earnings surprise of 21.9%, on average. This is depicted in the graph below:

Halliburton Company Price and EPS Surprise

Halliburton Company Price and EPS Surprise

Halliburton Company price-eps-surprise | Halliburton Company Quote

The Trend in Estimate Revision

The Zacks Consensus Estimate for the third-quarter bottom line remained the same in the last seven days. The estimated figure indicates a 154.6% surge year over year. The Zacks Consensus Estimate for revenues, meanwhile, suggests a 32.2% increase from the year-ago period.

Factors to Consider

Oil and natural gas prices have rebounded sharply, revisiting their multi-year highs due to rising demand. Consequently, drilling activity — an important factor for services companies — has been modestly picking up. In the United States, a region on which Halliburton is highly dependent, rig count at the end of the third quarter was 521 compared with 470 three months ago, in sync with the strength in commodity prices. The Zacks Consensus Estimate for the third-quarter operating income of Completion & Production and Drilling & Evaluation is pegged at $350 million and $188 million, respectively, indicating an increase of 65.1% and 79% year over year.
But on a somewhat bearish note, the company is likely to have experienced a sequential uptick in capital investments. During the April-June period, Halliburton spent some $190 million as capital outlay, which it expects to ramp up over the subsequent quarters of 2021. This might have impacted the company’s bottom line in the third quarter.

What Does Our Model Say?

The proven Zacks model does not conclusively show that Halliburton is likely to beat estimates in the third quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. But that’s not the case here.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, for this company is -2.10%.
Zacks Rank: Halliburton currently carries a Zacks Rank #3.

Stocks to Consider

While an earnings beat looks uncertain for Halliburton, here are some firms from the energy space that you may want to consider on the basis of our model:
Oceaneering International, Inc. OII has an Earnings ESP of +100% and a Zacks Rank #1. The firm is scheduled to release earnings on Oct 27.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Royal Dutch Shell plc (RDS.A) has an Earnings ESP of +4.13% and is Zacks #1 Ranked. The firm is scheduled to release earnings on Oct 28.
Baker Hughes BKR has an Earnings ESP of +15.15% and a Zacks Rank #3. The firm is scheduled to release earnings on Oct 20.

5 Stocks Set to Double

Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

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Halliburton Company (HAL): Free Stock Analysis Report
Royal Dutch Shell PLC (RDS.A): Free Stock Analysis Report
Oceaneering International, Inc. (OII): Free Stock Analysis Report
Baker Hughes Company (BKR): Free Stock Analysis Report
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