Halliburton Co. (HAL) - Get Report stock jumped on Monday, Jan. 22, after the oilfield service company reported better-than-expected earnings for its fourth quarter and issued an upbeat outlook for 2018.
Shares of Halliburton rose by 3.8% to $55.04 at 10:15 a.m. EST on Monday.
The Houston-based company posted a loss of $824 million for the period. Adjusted earnings of 53 cents per share beat analysts' estimates of 46 cents per share. Revenue of $5.9 billion for the quarter also surpassed forecasts of $5.6 billion. For the full-year, Halliburton posted revenue of $20.6 billion.
Loop Capital Markets Managing Director Stephen Gengaro said that the operating EPS beat was "driven mainly by strong revenue growth in all markets and significantly better-than-expected margins in the Drilling & Evaluation (D&E) segment."
D&E revenues expanded by 12% quarter-over-quarter and "EBIT margin of 13.6% expanded about 420 basis points sequentially on a strong 48% incremental," J.P. Morgan analyst Sean Meakim wrote in a Jan. 22 research note.
"Outstanding execution resulted in an excellent fourth quarter and we are well positioned to take advantage of opportunities presented by a growing North America market and improving international outlook," Chief Executive Jeff Miller said in a statement.
To be sure, the company with a market capitalization of $48 billion took a $1.27 billion hit from unpaid bills in Venezuela and the U.S. tax overhaul. Halliburton wrote down the value of its business in Venezuela by $385 million citing the "recent credit rating downgrades and deteriorating market condition" in the Latin America oil producer. The U.S. tax system overhaul, which dropped the corporate tax rate to 21%, triggered a non-cash $882 million charge, Halliburton said.
Overall, however, Halliburton provided a positive outlook for the year ahead.
"I am optimistic about what I see in 2018," said CEO Jeff Miller. "Commodity prices are supportive of increasing activity in North America and I am encouraged by the increase in tender activity and the positive discussions we are having with our international customers."
"We expect to generate significant cash flows and industry-leading returns," Miller added during a conference call with analysts.
Loop's Gengaro believes that Halliburton is "well positioned to benefit from strong demand and the tight U.S. pressure pumping market as well as gradually improving activity internationally." The firm reiterated its Buy rating on Halliburton stock and a $75 price target.
Schlumberger, a holding in TheStreet's Jim Cramer's charitable trust, Action Alerts PLUS, also gave an upbeat industry outlook. Chairman and CEO Paal Kibsgaard said that 2018 would be the first year of growth in all parts of its global operations since 2014. Schlumberger rose 2.3% to $78.18 in Monday morning trading.
"The oil market is now in balance and the previous oversupply discount is gradually being replaced by a market tightness premium, which makes us increasingly positive on the global outlook for our business," Kibsgaard said.
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