Halliburton Company Stock Hold Recommendation Reiterated (HAL)

NEW YORK (TheStreet) -- Halliburton Company (NYSE:HAL) has been reiterated by TheStreet Ratings as a hold with a ratings score of C+ . The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and notable return on equity. However, as a counter to these strengths, we also find weaknesses including poor profit margins and a generally disappointing performance in the stock itself.

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Highlights from the ratings report include:

• The revenue growth came in higher than the industry average of 15.0%. Since the same quarter one year prior, revenues rose by 30.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
• The current debt-to-equity ratio, 0.35, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, HAL has a quick ratio of 1.85, which demonstrates the ability of the company to cover short-term liquidity needs.
• HALLIBURTON CO has improved earnings per share by 23.2% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, HALLIBURTON CO increased its bottom line by earning $3.26 versus $1.96 in the prior year. For the next year, the market is expecting a contraction of 1.5% in earnings ($3.21 versus $3.26).
• HAL's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 45.45%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
• The gross profit margin for HALLIBURTON CO is rather low; currently it is at 21.50%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 9.10% trails that of the industry average.

Halliburton Company provides various products and services to the energy industry for exploring, developing, and producing oil and natural gas worldwide. It operates in two segments, Completion and Production, and Drilling and Evaluation. The company has a P/E ratio of 9.3, below the average energy industry P/E ratio of 9.6and below the S&P 500 P/E ratio of 17.7. Halliburton has a market cap of $28.4 billion and is part of the basic materials sector and energy industry. Shares are down 8.6% year to date as of the close of trading on Tuesday.

You can view the full Halliburton Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

 

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