(Halliburton earnings story updated for Monday trading)
NEW YORK (
) -- Earnings for oil service giants are going according to script, with
with an earnings beat on Monday morning. Halliburton, unlike Schlumberger, is seeing a little more love from the market, though.
One big difference between Halliburton and Schlumberger is valuation. Halliburton is currently trading at just over 14 times 2011 consensus earnings, versus Schlumberger, trading at over 21 times consensus earnings.
Halliburton's fourth-quarter net profit of $605 million, or 66 cents per share, beat the Street estimate of 63 cents per share. Excluding a 2-cent-per-share charge related to former a subsidiary's settlement with Nigeria, earnings per share were 68 cents.
Halliburton revenue was $5.2 billion, beating the Street expectation for revenue of $4.9 billion.
On Friday, when Schlumberger reported revenue and earnings above the Street consensus, an early morning rally fizzled quickly, and Schlumberger shares ended down 1.5% on Friday.
Halliburton shares up close to 2% on Monday morning and the oil service stock had hits its average daily volume of 10 million shares before the mid-day mark. Even after its 2% gain, Halliburton still hasn't returned to the 52-week high level it attained in December at over $41.
Headed into the Schlumberger earnings, the big question was whether the oil-service stocks would repeat the third-quarter earnings trade, when the stocks reported strong numbers, presented a positive outlook, yet still sold off as event-driven traders booked profits.
Schlumberger and Halliburton presented a picture of business that was more or less the expectation ahead of its fourth-quarter earnings: North America at a peak, yet pricing will come down; and international activity improving but lacking really specific data points at the present time.
Earnings beats and a broadly positive tone may keep the oi- service stocks near 52-week high levels but not move them much higher, as event-driven traders book profits, creating a period of choppy performance before the money in these stocks again consolidates in the hands of long-term investors.
Darren Gacicia, energy analyst at Dahlman Rose, had the opinion coming into earnings that given the big run up in these stocks, unless the companies provided "whoppingly good guidance," it would be tough to drive the shares higher. He noted that it's especially difficult given the level of trading-oriented money involved in these oil service names.
"Everything is positive in terms of where things are headed, but when you watch the tape on Friday after Schlumberger to get a sense for what everybody thinks, and a tone saying that international growth is back-half loaded for 2011, it can serve to push out the next major catalyst," the Dahlman Rose analyst said. It also means that the short-term, event driven trade will tilt to the negative.
are yet to report among oil-service stock peers.
Schlumberger, Weatherford and Baker-Hughes were also trading in the green on Monday morning, though only with modest gains.
-- Written by Eric Rosenbaum from New York.
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