Halliburton (HAL) Stock Rises on Note Offering

Halliburton (HAL) stock is increasing after the company announced it will issue senior notes to finance the Baker Hughes (BHI) acquisition.
By Amanda Gomez ,

NEW YORK (TheStreet) -- Halliburton (HAL) - Get Report stock is gaining 1.15% to $38.85 in midday trading after the company announced it will issue senior notes to help finance the Baker Hughes (BHI) acquisition.

The oil service company will offer $7.5 billion in senior notes in five tranches with rates between 2.7% and 5% and maturity dates between 2020 and 2045.

Part of the proceeds will be used for portions of cash payment to acquire Baker Hughes, which the company agreed to buy in November 2014 for $34.6 billion.

The transaction is facing regulatory scrutiny, but the companies expect the acquisition to close, even if the closing date is pushed back to next year.

The notes that mature in 2020 and 2022 may be subject to special mandatory redemption if the Baker Hughes acquisition does not gain regulatory approval, while the remainder of the proceeds will be used for general corporate purposes.

Separately, TheStreet Ratings team rates HALLIBURTON CO as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

We rate HALLIBURTON CO (HAL) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. Among the primary strengths of the company is its solid financial position based on a variety of debt and liquidity measures that we have evaluated. At the same time, however, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • HAL, with its decline in revenue, slightly underperformed the industry average of 31.4%. Since the same quarter one year prior, revenues fell by 35.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Despite currently having a low debt-to-equity ratio of 0.51, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.42 is sturdy.
  • HALLIBURTON CO has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, HALLIBURTON CO increased its bottom line by earning $4.03 versus $2.37 in the prior year. For the next year, the market is expecting a contraction of 63.1% in earnings ($1.49 versus $4.03).
  • The gross profit margin for HALLIBURTON CO is rather low; currently it is at 17.20%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -0.96% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to $26.00 million or 96.89% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • You can view the full analysis from the report here: HAL

Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.

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