Halliburton Q1-07 Earnings Preview
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From 247WallSt
Halliburton (NYSE: HAL) reports first quarter earnings before the bell tomorrow; EPS is expected to be $0.52 after a mid-March revision after the company lowered guidance.
Halliburton’s main competitors have already reported, with Schlumberger (NYSE: SLB) reporting last week and Baker Hughes (NYSE: BHI) just reporting this morning. Schlumberger reported 63% growth in profits on a 28% rise in revenue. Baker Hughes reported EPS of $1.17 versus estimates of $1.10, while revenue rose 20% in the quarter to $2.47 billion. North American revenue was up 14% at Baker Hughes (to $1.047b); the company is forecasting about 7% growth in that market for the rest of the year and 19% to 20% for international markets.
Halliburton has a similar revenue profile to Baker Hughes; BHI has about 42% of revenues coming from North America, while Halliburton has about 50% (as of 12/31/06). Schlumberger had such a strong earnings report mainly because nearly three-quarters of their revenue comes from overseas.
The KBR spin-off is complete, with the remaining 81% of the company exchanged with HAL shareholders in a tax-free transaction on April 5th. As we’ve stated before in our break-up analysis of Halliburton, this split should benefit HAL shareholders over time to the tune of a higher multiple, one closer to the 22x trailing earnings seen at SLB (HAL trades for 14x earnings) S&P also has the company on "positive credit watch" since the KBR spin-off.
Plus, with KBR off the books, it won’t be quite as easy to hate this company. There won’t be Iraq contract disputes to deal with anymore, but then again this is a company that just moved its headquarters to Dubai. That might help win a few contracts in the Middle East that were on the fence, but there is bound to be some drag on the stock just based on perceptions.
People’s opinions on the future price of oil vary greatly, but most estimates center on prices going higher (or at least remaining high) rather than lower. T. Boone Pickens reiterated yesterday that he thinks oil will hit $80 this year. We are already well within the range at which it is profitable to drill, and the longer oil prices stay high, the easier it becomes to make capital allocation decisions in favor of higher oil exploration.
Ryan Barnes
For more market insight go to http://www.247wallst.com/
Halliburton (NYSE: HAL) reports first quarter earnings before the bell tomorrow; EPS is expected to be $0.52 after a mid-March revision after the company lowered guidance.
Halliburton’s main competitors have already reported, with Schlumberger (NYSE: SLB) reporting last week and Baker Hughes (NYSE: BHI) just reporting this morning. Schlumberger reported 63% growth in profits on a 28% rise in revenue. Baker Hughes reported EPS of $1.17 versus estimates of $1.10, while revenue rose 20% in the quarter to $2.47 billion. North American revenue was up 14% at Baker Hughes (to $1.047b); the company is forecasting about 7% growth in that market for the rest of the year and 19% to 20% for international markets.
Halliburton has a similar revenue profile to Baker Hughes; BHI has about 42% of revenues coming from North America, while Halliburton has about 50% (as of 12/31/06). Schlumberger had such a strong earnings report mainly because nearly three-quarters of their revenue comes from overseas.
The KBR spin-off is complete, with the remaining 81% of the company exchanged with HAL shareholders in a tax-free transaction on April 5th. As we’ve stated before in our break-up analysis of Halliburton, this split should benefit HAL shareholders over time to the tune of a higher multiple, one closer to the 22x trailing earnings seen at SLB (HAL trades for 14x earnings) S&P also has the company on "positive credit watch" since the KBR spin-off.
Plus, with KBR off the books, it won’t be quite as easy to hate this company. There won’t be Iraq contract disputes to deal with anymore, but then again this is a company that just moved its headquarters to Dubai. That might help win a few contracts in the Middle East that were on the fence, but there is bound to be some drag on the stock just based on perceptions.
People’s opinions on the future price of oil vary greatly, but most estimates center on prices going higher (or at least remaining high) rather than lower. T. Boone Pickens reiterated yesterday that he thinks oil will hit $80 this year. We are already well within the range at which it is profitable to drill, and the longer oil prices stay high, the easier it becomes to make capital allocation decisions in favor of higher oil exploration.
Ryan Barnes
For more market insight go to http://www.247wallst.com/
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