Halliburton (HAL) Q2 Earnings on Deck: Here's How It Will Fare
Halliburton Company HAL is set to release second-quarter results on Jul 19. The current Zacks Consensus Estimate for the to-be-reported quarter is a profit of 75 cents per share on revenues of $5.9 billion.
Let’s delve into the factors that might have influenced the oilfield service firm’s performance in the June quarter. But it’s worth taking a look at HAL’s previous-quarter performance first.
Highlights of Q1 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 on stronger-than-expected profit from both its divisions. Halliburton had reported adjusted net income per share of 72 cents, surpassing the Zacks Consensus Estimate of 67 cents. Revenues of $5.7 billion also came ahead of the Zacks Consensus Estimate by some $177 million.
HAL beat the Zacks Consensus Estimate in each of the last four quarters, which resulted in an earnings surprise of 7.7%, on average. This is depicted in the graph below:
Halliburton Company Price and EPS Surprise
Halliburton Company price-eps-surprise | Halliburton Company Quote
Trend in Estimate Revision
The Zacks Consensus Estimate for the second-quarter bottom line has remained unchanged in the past seven days. The estimated figure indicates a 53.1% jump year over year. The Zacks Consensus Estimate for revenues, meanwhile, suggests a 15.3% increase from the year-ago period.
Factors to Consider
After bouncing strongly from the depths of the pandemic, the oil and natural gas rig count in the U.S. has been gradually declining over the past year or so. Consequently, drilling activity — an important factor for services companies — has hit a speed bump. In the United States, a region on which Halliburton is highly dependent, rig count at the end of the second quarter was 674 compared with 753 a year ago. This is in sync with the tick-down in commodity prices. The steady decline in rig count is worrying for contracting activity.
Considering the relatively soft operating environment, the Zacks Consensus Estimate for the second-quarter operating income of the Drilling & Evaluation unit is pegged at $365 million, indicating a slight decrease of $4 million sequentially.
On a further bearish note, the increase in HAL’s costs might have dented the company’s to-be-reported bottom line. The company’s first-quarter cost of sales totaled $4.6 billion, up 25.6% from the year-ago period. The upward cost trajectory is likely to have continued in the second quarter due to the prevailing inflationary environment.
But giving some respite to the company, the Zacks Consensus Estimate for the second-quarter operating income of Completion & Production segment is pegged at $703 million, indicating a 5.6% improvement from the previous quarter on the back of higher international and offshore activity.
What Does Our Model Say?
The proven Zacks model does not conclusively show that HAL is likely to beat estimates in the secondquarter. 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 -0.59%.
Zacks Rank: Halliburton currently carries a Zacks Rank #4 (Sell).
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:
Valero Energy Corporation VLO has an Earnings ESP of +1.42% and a Zacks Rank #3. The firm is scheduled to release earnings on Jul 27.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Valero Energy beat the Zacks Consensus Estimate for earnings in each of the last four quarters. It has a trailing four-quarter earnings surprise of 11.7%, on average. Valued at around $41.9 billion, VLO has gained 14.1% in a year.
HF Sinclair Corporation DINO has an Earnings ESP of +3.20% and a Zacks Rank #3. The firm is scheduled to release earnings on Aug 3.
HF Sinclair beat the Zacks Consensus Estimate for earnings in three of the last four quarters and missed in the other. It has a trailing four-quarter earnings surprise of 12.8%, on average. Valued at around $9 billion, DINO has gained 9.1% in a year.
Southwestern Energy Company SWN has an Earnings ESP of +8.91% and a Zacks Rank #3. The firm is scheduled to release earnings on Aug 3.
Southwestern Energy beat the Zacks Consensus Estimate for earnings in three of the last four quarters and missed in the other. It has a trailing four-quarter earnings surprise of 3.7%, on average. Valued at around $6.6 billion, SWN has gained 8.7% in a year.
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Halliburton Company (HAL) : Free Stock Analysis Report
Valero Energy Corporation (VLO) : Free Stock Analysis Report
Southwestern Energy Company (SWN) : Free Stock Analysis Report
HF Sinclair Corporation (DINO) : Free Stock Analysis Report
