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Halliburton Earnings Preview: Flat Revenue, Lower EPS Expected

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Halliburton (NYSE: HAL), the world's second largest oil field services firm and the world's largest provider of pressure pumping services used for fracking shale gas and oil wells, is scheduled to report its first-quarter 2013 results Monday, April 22, before the markets open.

Investors will be keeping an eye on the impact of natural gas drilling activity dropping to a 14-year low. Halliburton also is expected to take a one-time foreign exchange related charge of $30 million for its operations in Venezuela. The question is, are all headwinds priced into the stock?

Expectations

Analysts on average predict that Halliburton will report that revenue for the quarter totaled $6.88 billion, which is about the same as in the year-ago period. Earnings of $0.57 per share are also in the consensus forecast. That would be down from a reported profit of $0.89 per share in the comparable period of last year.

Note that the consensus earnings per share (EPS) estimate has ticked down in the past 60 days from $0.58. But Halliburton has not fallen short of consensus EPS estimates in the past four quarters. Back in the fourth quarter, EPS beat expectations by more than three percent.

Fourth-quarter results were attributed in part to "higher completion activity in the Gulf of Mexico and increased direct sales internationally." The CEO said, "In 2013, we anticipate the North America rig count will improve from fourth quarter levels but will be down slightly compared to 2012." The share price rose about three percent in the days following the fourth-quarter report.

Looking ahead to the current quarter, the forecast currently calls for earnings more than 12 percent lower to $0.70 per share. That EPS estimate has not changed in the past 60 days. And revenue for the quarter is again expected to be essentially flat, relative to a year ago. But full-year revenue is so far expected to be up by less than four percent.

The Company

Halliburton provides a range of services and products to companies worldwide for the exploration, development and production of oil and natural gas. Its Completion and Production segment offers various production enhancement services. The Drilling and Evaluation segment offers drill bits and various services.

The company was founded in 1919, and its headquarters are in Houston. Halliburton is a component of the S&P 500, and it now has a market capitalization of about $34.6 billion. David J. Lesar has been chief executive officer and executive chairman of the company since August 2000.

Competitors include Baker Hughes (NYSE: BHI) and Schlumberger (NYSE: SLB). Both reported last week that their quarterly results were hurt by weak drilling in North America, but both companies topped consensus EPS estimates. Schlumberger was the more cautious of the two about the region going forward.

During the three months that ended in March, Halliburton named a new member of its board, opened a new facility in Singapore and announced a 39 percent dividend hike.

Performance

Halliburton has a long-term earnings per share growth forecast of more than 16 percent and a price-to-earnings (P/E) ratio that is less than the industry average. Its operating margin is better than the industry average, and it has a return on equity of almost 18 percent. The dividend yield is near 1.2 percent.

The number of Halliburton shares sold short, as of the March 28 settlement date, represents about two percent of the float. That is the lowest level of short interest in almost a year. Days to cover is less than two.

The consensus recommendation of analysts surveyed by Thomson/First Call who follow the stock has been to buy shares for the past three months. Twelve of the 34 analysts rate the stock at Strong Buy. The analysts' mean price target, or where they expect the stock to go, is more than 24 percent higher than the current share price. That would be a level the shares have not seen since August 2011.

The share price has retreated more than six percent in the past month, though it is still more than 11 percent higher than a year ago. It is below the 50-day moving average. Over the past six months, Halliburton has underperformed the broader markets, but outperformed the competitors mentioned above.

Posted-In: Baker Hughes halliburton SchlumbergerEarnings Long Ideas Short Ideas Previews Trading Ideas Best of Benzinga

 

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