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Halliburton Company (NYSE:HAL): Earnings Growth Remains Elusive

Simply Wall St

After Halliburton Company's (NYSE:HAL) earnings announcement on 30 June 2019, it seems that analyst forecasts are fairly pessimistic, as a 5.3% fall in profits is expected in the upcoming year. However, compared to its 5-year track record of the average earnings growth rate of -12%, this is still an improvement. With trailing-twelve-month net income at current levels of US$1.7b, the consensus growth rate suggests that earnings will decline to US$1.6b by 2020. Below is a brief commentary on the longer term outlook the market has for Halliburton. Investors wanting to learn more about other aspects of the company should research its fundamentals here.

View our latest analysis for Halliburton

How will Halliburton perform in the near future?

Longer term expectations from the 29 analysts covering HAL’s stock is one of positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To reduce the year-on-year volatility of analyst earnings forecast, I've inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.

NYSE:HAL Past and Future Earnings, August 22nd 2019

From the current net income level of US$1.7b and the final forecast of US$2.8b by 2022, the annual rate of growth for HAL’s earnings is 30%. EPS reaches $2.59 in the final year of forecast compared to the current $1.89 EPS today. In 2022, HAL's profit margin will have expanded from 6.9% to 10%.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Halliburton, there are three pertinent factors you should further research:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is Halliburton worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Halliburton is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Halliburton? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.