Halliburton

What does HAL do?

Halliburton provides a variety of oil field services, from pressure pumping to drilling, across North America and about 80 countries. The company serves a variety of national, international, and independent oil and gas companies.  Halliburton’s extensive oil field experience makes it a fierce competitor in the oil services industry. Its managerial talent and international expertise are considerable, as the company routinely wins high-profile contracts in key regions such as the Middle East. Analysts believe Halliburton is well ahead of peers in terms of providing fully integrated drilling solutions, as Baker Hughes BHI and Schlumberger SLB only recently bought BJ Services and Smith to assist them in their own integrated offerings.

Therefore, it will be very difficult for competitors to catch up and beat Halliburton in North America for this cycle. Halliburton has estimated that around 60% of its well completions at the end of 2011 will be using fully integrated offerings, and its peers’ approaches are not quite as fully developed. Internationally,an improving market throughout 2012 as rig activity slowly picks up. International markets such as Brazil, Mexico, Iraq, and Russia all offer growth opportunities for the next few years.

Why HAL?

This is not one of the high flying names. This stock has been recently beaten down even though the OIL continues to grind higher. This is one of the few stocks that brings out the contrarian in me. The stock is at lowest level in years and has significant upside if you can hang on for a year or more. I bought some at 33.9$ and plan on doubling at 30$. The intial stop will be 29.3.

So above stats confirm that the stock is amazingly cheap compared to its peers. Infact at such market cap and comparable revenue, this is the cheapest stock out there. The average target for this stock is 60$ and some setting price tag of almost 80$. Let’s look at the second set of number.

Year EPS High ($) Low ($)
2007 2.48 41 27
2008 2.85 55 12
2009 1.35 32 14
2010 2.05 41 21
2011 3.35 57 27
2012 3.9
2013 4.52
Last 4   Quarters EPS % Change Sales (million) %Change Fund Owners
Q4 0.61 118% 5282 40% 1957
Q3 0.81 56% 5935 35% 1987
Q2 0.94 65% 6548 40% 2071
Q1 1 47% 7065 37% 2072
P/E 11
P/E 5 Year Range Apr-12
Earning Growth NA
ROE 26%
Cash Flow/Share 4.83
R&D Expense of sales NA
Debt 37%
Beta 1.71

Even the data above does not support such low multiples. According to me this is a value investor’s pin up stock. But again being a growth investor, I have certain questions. Is this a value trap? Does it indicate something in future? HAL has a huge value investor fanfare ranging from Graham followers to Piotroski’s score supporters.

Lastly chart time –

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