Here is a big move! Halliburton (NYSE:HAL) stock has gone up by more than 16% in the past 5 trading days, while the S&P 500 crawled up just 1.7%. One of the factors could be that crude oil prices have been rising steadily for the past two weeks, which could be an indicator of improved demand – and that means oil companies paying up for past and new projects to drilling players such as Halliburton. So what comes next for investors? Will Halliburton continue to rally? We think that in the near-to-mid term – yes! Our assessment is based on analyses of past stock patterns by our AI engine. It suggests that given the recent move, the expected return for Halliburton’s stock could be as high as 11% over the next 1 month, and a significantly high 32% return over the next 6 months. Our detailed dashboard highlights the expected return for Halliburton given its recent move, and can help you understand near-term return probabilities for different levels of movements.
But when it comes to the fundamentals, the picture is not so encouraging. When considering a longer time frame, it is important to look at the behavior of the underlying fundamentals. Our dashboard Big Movers: Halliburton Moved 16% – What Next? lays this out.
Halliburton’s stock price decreased -37% this year, from $24.47 to $15.39, before moving 16.2% last week, and ending at $17.88. At the beginning of this year, Halliburton’s trailing 12 month P/S ratio was 0.94. This figure decreased -24% to 0.71, before ending at 0.83. Compared to Halliburton’s P/S multiple of 0.83, the figure for its peer Schlumberger and National Oilwell Varco stands at 1.17 and 0.74, respectively. This suggests limited potential for upside in the multiple.
Let’s look at a longer time frame now. Halliburton’s stock price decreased -49% between 2017 and 2019, and has decreased -63% between 2017 and now. This consistent decline could reflect the trend in the underlying financials. Although Halliburton’s revenue increased 8.7% from $20,620 Mil in 2017 to $22,408 Mil in 2019, it saw a meaningful decline from 2018 to 2019. For the last 12 months, this figure stood at $18,974 Mil, implying a decrease of -15% over 2019 numbers. That’s okay, as it was not something unexpected considering Covid-19 related restrictions that governments put in place. However, margins have been a consistent concern. Halliburton’s net margins decreased from -2.2% in 2017 to -5% in 2019, and plummeted to -21.4% for the last 12 months.
Considering the above, we don’t feel very confident about Halliburton being an excellent investment choice, although a near term momentum play, as discussed above, can be considered. For investment, check out a high quality portfolio to beat the market, with over 100% return since 2016, versus 55% for the S&P 500. Comprised of companies with strong revenue growth, healthy profits, lots of cash, and low risk, it has outperformed the broader market year after year, consistently.