Halliburton Reports Positive Earnings; Trump Sends Crude Oil to Highest Level of the Year

Halliburton (Ticker Symbol: HAL) reported earnings on Monday morning before the bell.  The Houston, Texas-based oilfield services company reported earnings of .23 cents per share, slightly above analysts’ expectations of .22 cents per share.  Net income rose to $152 million dollars in the first quarter, up from $46 million in the same quarter a year earlier. Halliburton stated that the pricing deterioration in the oil fields services industry is now no longer a current threat, and they are seeing a broader recovery in its international markets.

The earnings release was announced right in the midst of President Trump stating that he will stop granting sanction waivers to a majority of Iran’s oil customers.  The move would restrict certain countries from importing Iranian crude oil and would accelerate the Trump administration’s objective of driving Iran’s exports to zero.  The sanctions would remove approximately 1 million barrels per day from the market.

This is also coming at a time when international demand has been high.  China announced last week that its economic growth is stronger than expected, which is supportive of commodity prices due to Chinese demand.  The news sent oil prices higher, spiking to new highs for the year.

Halliburton’s stock price over the past decade has been a volatile one for its shareholders.  In 2013, while WTI crude oil was comfortably above $100 a barrel, the stock went on a tear rallying over 125% over the course of 18 months.  Halliburton’s stock peaked at an all-time high of $74.33 on July 23, 2014. The price of WTI crude oil dropped to under $30 dollars a barrel in 2016, due to huge large shale findings in the U.S. and advances in oil field technology enabling oil companies to extract a larger amount of oil from shale formations.  Unfortunately, this sent Halliburton’s stock tumbling, erasing all of its gains from its previous rally.

Halliburton’s stock price had a positive start in the first quarter of 2018.  However, it proceeded to sell off for the remaining three quarters of 2018, led by a series of poor earnings and revenue reports, along with depressed crude oil prices.  The stock has had a positive start to 2019 gaining over 20% in the first two months of the year. Halliburton then proceeded to break above its 2018 downtrend and began to trade above the 100-Day Moving Average. Currently, as of this writing, Halliburton’s stock is sitting up 16% year to date.

(Chart above courtesy of ​www.tipranks.com​)

Based on a survey of 9 analysts offering 12-month price targets, the average price target for Halliburtons’s stock is $40.38. According to that number, the stock is priced at a discount relative to Wall Street’s analysts and could be considered undervalued around current levels near $31.03.

Oilfield Service companies like Halliburton and Schlumberger (Ticker Symbol: RIG) have been struggling with the tightening of spending from oil producers due to the depressed price of crude oil in 2018.  The prices of crude oil have been on a tear so far this year, spurring more demand for oil field service companies from major oil producers. Investors in the energy space should look for Chevron and ExxonMobile’s earnings release on Friday for more news within the sector.

 


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