Major oilfield services provider Halliburton Co. (HAL) is scheduled to report its third quarter 2011 results on October 17, 2011 before the start of trading.
The Zacks Consensus Estimate for the to-be-reported quarter is a profit of 92 cents per share, on revenue of $6,352 million.
Second Quarter Recap
Halliburton’s second-quarter 2011 results came in better than expected, aided by the strength and sustainability of the all-important North American onshore activity levels (to which the company is heavily exposed through its market-share-leading pressure-pumping business).
Earnings per share, excluding special items, came in at 81 cents, beating the Zacks Consensus Estimate of 72 cents and comfortably ahead of the year-ago profit of 52 cents.
Revenues of $5.9 billion were 35.3% above second quarter 2010 and ahead of the Zacks Consensus Estimate of $5.6 billion, as sales increased across the company’s business units.
(Read our full coverage on this earnings report: North America Buoys Halliburton).
Agreement of Analysts
The analysts project an optimistic sentiment on Halliburton’s to-be-reported quarter despite the liabilities of the Deepwater Horizon incident that loom over the stock. Furthermore, disturbances in North Africa, the drop in deepwater Gulf activity and sluggish international pricing are expected to pull back the company’s performance.
However, the analysts believe that Halliburton enjoys a strong competitive position within the global oilfield services markets based on its broad and technologically complex product and service offerings, along with its robust financial profile.
Out of the 24 analysts covering the stock, 7 have revised their estimates upward for the third quarter of 2011, while one moved in the opposite direction. The last seven days saw a complete dearth of estimate revision.
Magnitude of Estimate Revisions
With effect from the earnings revisions by the analysts in the last 30 days, the Zacks Consensus Estimate for the quarter increased by a penny to 92 cents. For the past seven days, the estimate for the third quarter remained static.
Surprise History
Halliburton exhibited a positive earnings surprise trend over the last four quarters. The company recorded a minimum surprise of 3.57% in third quarter 2010 while a maximum of 12.50% was in second quarter 2011. On average, the earnings surprise was 7.30%.
Our Recommendation
Houston, Texas-based Halliburton remains the best-positioned company in the U.S. pressure pumping market, with significant acreage positions in the highest profile plays, such as the Haynesville, Eagle Ford shale and Bakken. In the near term, Halliburton is likely to benefit from bullish U.S. land drilling trends with demand improvements in select North American basins.
However, looking at the longer term, we have a Neutral recommendation on Halliburton taking into account the depressed natural gas prices, international operational risks and aftereffects of the Deepwater Horizon rig disaster. As such, we see the stock performing in line with its peers Schlumberger Ltd. (SLB) and Baker Hughes Incorporated (BHI).
Halliburton currently retains a Zacks #3 Rank, which translates into a short-term Hold rating.
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