Halliburton (HAL) Q3 Earnings on Deck: Here's How It Will Fare
Halliburton Company HAL is set to release third-quarter results on Oct 24. The current Zacks Consensus Estimate for the to-be-reported quarter is a profit of 77 cents per share on revenues of $5.8 billion.
Let’s delve into the factors that might have influenced the oilfield service firm’s performance in the September quarter. But it’s worth taking a look at HAL’s previous-quarter performance first.
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 on stronger-than-expected profit from both its divisions. Halliburton had reported adjusted net income per share of 77 cents, surpassing the Zacks Consensus Estimate of 75 cents. However, revenues of $5.8 billion came below the Zacks Consensus Estimate by some $49 million on tepid sales from international regions.
HAL beat the Zacks Consensus Estimate in each of the last four quarters, which resulted in an average earnings surprise of 6.2%. 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 third-quarter bottom line has remained unchanged in the past seven days. The estimated figure indicates a 28.3% improvement year over year. The Zacks Consensus Estimate for revenues, meanwhile, suggests a 9% 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 United States 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 third quarter was 623 compared with 765 a year ago. This steady decline in rig count is worrying for contracting activity.
On a further bearish note, the increase in HAL’s costs might have dented the company’s to-be-reported bottom line. Going by our model, the company’s third-quarter cost of sales will likely total $4.8 billion, up 6.7% from the year-ago period. The upward cost trajectory could be attributed to the prevailing inflationary environment.
But giving some respite to the company, our expectation for the third-quarter operating income of the Completion & Production segment is pegged at $708.8 million, indicating a 21.6% 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 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: Halliburton has an Earnings ESP of 0.00%. This is because the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at 77 cents per share each.
Zacks Rank: HAL currently carries a Zacks Rank #3, which increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction difficult this earnings season.
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:
Matador Resources Company MTDR has an Earnings ESP of +6.38% and a Zacks Rank #1. The firm is scheduled to release earnings on Oct 24.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Matador Resources beat the Zacks Consensus Estimate for earnings in each of the last four quarters. It has a trailing four-quarter earnings surprise of 11.8%, on average. Valued at around $7.6 billion, MTDR has gained 4.8% in a year.
Range Resources Corporation RRC has an Earnings ESP of +7.08% and a Zacks Rank #2. The firm is scheduled to release earnings on Oct 24.
Range Resources beat the Zacks Consensus Estimate for earnings in each of the last four quarters. It has a trailing four-quarter earnings surprise of 21.7%, on average. Valued at around $8.4 billion, RRC has gained 25.2% in a year.
Oceaneering International, Inc. OII has an Earnings ESP of +7.93% and a Zacks Rank #1. The firm is scheduled to release earnings on Oct 25.
For 2023, Oceaneering International has a projected earnings growth rate of 167.7%. Valued at around $2.6 billion, OII has surged 186.5% in a year.
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Halliburton Company (HAL) : Free Stock Analysis Report
Range Resources Corporation (RRC) : Free Stock Analysis Report
Oceaneering International, Inc. (OII) : Free Stock Analysis Report
Matador Resources Company (MTDR) : Free Stock Analysis Report
