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Bear of the Day: Halliburton (HAL)

Tracey Ryniec

Halliburton Company (HAL) is facing a turbulent 2019. This Zacks Rank #5 (Strong Sell) is seeing uncertainty in the energy market which is leading to earnings estimate cuts.

Halliburton is one of the world's largest energy service companies, with business in more than 80 countries. It's involved in drilling, well construction and completion and optimizing energy assets.

North America Weak in Q4

On Jan 22, Halliburton reported its fourth quarter results and beat the Zacks Consensus by 4 cents. Earnings were $0.41 versus the consensus of $0.37.

Revenue fell 4% to $5.9 billion, with it falling 11% sequentially in North America to $3.3 billion just as the international business picked up, rising 7% sequentially to $2.6 billion.

CEO Jeff Miller commented, "The trajectory of this cycle has been far from smooth."

Analysts Bearish About 2019

The analysts have cut estimates since the fourth quarter results.

Earnings for 2019 are now expected to be just $1.39, down from $2.00 just 90 days ago.

That's an earnings decline of 26.9% from 2018 where the company made $1.90.

Halliburton will report first quarter 2019 results on Apr 22.

Shares Try to Recover

The energy stocks got hammered in 2018 and Halliburton was no exception.



Shares fell 39.7% over the last year but have recovered off their lows in 2019, gaining 7.1% year-to-date.

They're not cheap either, with a forward P/E of 20.3. However, shareholders do get a dividend currently yielding 2.5%.

If you're looking at the oil service companies, you might want to consider Schlumberger (SLB). It's a Zacks Rank #3 (Hold).

While earnings estimates have also been cut for Schlumberger, earnings are only expected to fall about 2% in 2019.

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