Will A Bearish Macro Picture Affect Halliburton?

Halliburton Company HAL shareholders saw their stock drop over 30 percent between July and mid-October -- a move that's reflective of a very difficult crude oil pricing environment.

With the recent bottom in stocks and crude oil, though, Halliburton shares have rebounded nearly 20 percent off of the lows. The strong correlation between the stock's price and movements in crude, in fact, has to be a key point to watch for current and potential investors.

What The Bulls See...

• An enterprise value of $52.93 billion that eclipses a market capitalization of $45.14 billion
• A price-to-book ratio of 2.86
• A price-to-sales ratio of 1.40
• A P/E ratio near 11 versus estimated 2015 revenue and EPS growth of 8.2 percent and 22.3 percent respectively
• 10.69 percent net profit margins that spin off approximately $1.6 billion in positive levered free cash flow annually
• A current ratio of 2.52
• A debt-to-equity ratio of 50.37 percent
• An annual dividend yield of 1.3 percent

What the bears see in Halliburton…

• An overall bearish technical set-up, both for crude oil and Halliburton shares

The Technical Take

Technicians note Halliburton shares became very oversold during the most recent sell-off, but that the oversold condition has been partially alleviated. Now, shares are in the middle of the range in terms of overbought/oversold readings.

Related Link: 6 Things The Bulls See In Exxon Mobil

The technicians also note Halliburton may be in the midst of an “abc” upside correction with projected resistance at $60.51, which actually corresponds with the downtrend line that goes back to the July peak. Support starts at $51.61 and is supported on the downside by a recent low of $47.60.

Overall…

Halliburton, on the whole, looks like it will be a true bargain at some point. However, so much with the share price depends on what's happening with crude oil that potential buyers must at least partially base their decision to buy or not on whether the price of crude has bottomed.

On that note, technicians say that crude may have room to bounce up to $84 or so before another push lower begins.

Perhaps that movement will coincide with Halliburton running to resistance before a push to the lows.