As of July 24, 2023, Halliburton Co (HAL, Financial) has seen a gain of 3.28%, with the stock price standing at $38.15. The company's GF Value, a unique indicator of a stock's intrinsic worth, is currently at $36.13, suggesting that the stock is fairly valued. With a market cap of $34.4 billion and sales reaching $21.7 billion, Halliburton Co exhibits strong financial metrics. The company's Earnings Per Share (EPS) stand at $2.16, while its operating margin and Return on Invested Capital (ROIC) are 16.21% and 15.61%, respectively.
Halliburton Co, one of the three largest oilfield service firms globally, specializes in a range of business lines, including completion fluids, wireline services, and cementing, among others. The company is recognized as the leading pressure pumper in North America and has been a key innovator in hydraulic fracturing over the past two decades.
GF Value: An Estimation of Fair Value
The GF Value of Halliburton Co is determined based on historical trading multiples, a GuruFocus adjustment factor derived from past performance and growth, and future business performance estimates. If the stock price is significantly above the GF Value Line, the stock may be overvalued, leading to poor future returns. Conversely, if the stock price is significantly below the GF Value Line, the stock may be undervalued, promising higher future returns. Given the current price of $38.15 per share, Halliburton Co appears to be fairly valued.
As Halliburton Co is fairly valued, the long-term return of its stock is likely to be close to the rate of its business growth.
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Financial Strength
Before investing in a company's stock, it is crucial to assess its financial strength. Companies with poor financial strength pose a higher risk of permanent loss. Halliburton Co's cash-to-debt ratio stands at 0.21, which is lower than 70.73% of companies in the Oil & Gas industry, indicating fair financial strength.
Profitability
Investing in profitable companies, particularly those with consistent long-term profitability, is less risky. Halliburton Co, with an operating margin of 16.21%, ranks better than 61.57% of companies in the Oil & Gas industry, indicating fair profitability.
Growth
Growth is a crucial factor in a company's valuation. Halliburton Co's 3-year average annual revenue growth stands at -4.4%, which is lower than 76.44% of companies in the Oil & Gas industry. However, its 3-year average EBITDA growth rate is 45.5%, outperforming 81.02% of companies in the industry.
ROIC vs WACC
Comparing a company's return on invested capital (ROIC) and the weighted cost of capital (WACC) can provide insights into its profitability. Halliburton Co's ROIC is 15.61, and its WACC is 10.21, indicating that the company effectively generates cash flow relative to the capital it has invested in its business.
Conclusion
In conclusion, Halliburton Co's (HAL, Financial) stock appears to be fairly valued. The company's financial condition and profitability are fair, and its growth outperforms 81.02% of companies in the Oil & Gas industry. To learn more about Halliburton Co stock, you can check out its 30-Year Financials here.
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