Halliburton (HAL) Stock Tanks, Oil Prices Slump on Inventory Data

Halliburton (HAL) shares are diving on Wednesday as oil prices fell after the weekly inventory report came out, showing that last week's growth in crude supplies exceeded analysts' expectations.
By U-Jin Lee ,

NEW YORK (TheStreet) --  Halliburton (HAL) - Get Report  shares are diving by 2.58% to $39.01 on Wednesday morning, as oil prices fell after the weekly inventory report came out, showing that last week's growth in crude supplies exceeded analysts' expectations.

According to the EIA, stockpiles increased by 2.8 million barrels last week, more than analysts' forecasts of 2.5 million barrels.

This data put further pressure on the persisting concerns over the global oil suply glut.

Crude oil (WTI) is decreasing by 2.59% to $46.66 per barrel and Brent crude is slumping by 2.97% to $49.04 per barrel, according to the CNBC.com index.

Despite this bearish news, gasoline and distillates stockpiles fell last week, the Wall Street Journal reports. 

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
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