On September 04, 2023, Halliburton Co (HAL, Financial) stock recorded a daily gain of 3.08%, contributing to a 3-month gain of 33.38%. The company's Earnings Per Share (EPS) stands at 2.72. But is the stock fairly valued? This comprehensive analysis seeks to answer this question and provide valuable insights into Halliburton Co's intrinsic value.
A Snapshot of Halliburton Co
Halliburton Co is a leading oilfield service firm, holding a dominant position in North America. The company's expertise spans across various business lines, including completion fluids, wireline services, and cementing, among others. With a market cap of $35.80 billion and a stock price of $39.81, Halliburton Co's intrinsic value, as estimated by the GF Value, stands at $37.84. This article delves into the company's value, intertwining financial assessment with vital company details.
Understanding the GF Value
The GF Value is an exclusive measure of a stock's intrinsic value. It's computed based on historical trading multiples, a GuruFocus adjustment factor grounded on past performance and growth, and future business performance estimates. The GF Value Line on our summary page provides an overview of the fair value at which the stock should ideally trade. If the stock price significantly deviates from the GF Value Line, it's likely to be overvalued or undervalued, influencing its future return.
According to GuruFocus Value calculation, Halliburton Co (HAL, Financial) appears to be fairly valued. This implies that the long-term return of its stock is likely to align closely with the rate of its business growth.
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Halliburton Co's Financial Strength
Investing in companies with poor financial strength poses a higher risk of permanent capital loss. Therefore, it's crucial to thoroughly review a company's financial strength before purchasing its stock. A good starting point is examining the cash-to-debt ratio. Halliburton Co's cash-to-debt ratio is 0.23, ranking it lower than 66.8% of 1021 companies in the Oil & Gas industry. However, the overall financial strength of Halliburton Co is fair, with a GuruFocus rank of 6 out of 10.
Profitability and Growth of Halliburton Co
Investing in profitable companies carries less risk, especially those demonstrating consistent profitability over the long term. Halliburton Co has been profitable 5 years over the past 10 years. With revenues of $22.40 billion and Earnings Per Share (EPS) of $2.72 in the past 12 months, its operating margin of 17.06% is better than 63.77% of 966 companies in the Oil & Gas industry. GuruFocus ranks Halliburton Co's profitability as fair.
Growth is a crucial factor in a company's valuation. Halliburton Co's 3-year average revenue growth rate is worse than 76.62% of 851 companies in the Oil & Gas industry. However, its 3-year average EBITDA growth rate is 45.5%, ranking better than 81.02% of 822 companies in the same industry.
ROIC vs WACC
Comparing a company's return on invested capital (ROIC) and the weighted average cost of capital (WACC) offers another perspective on its profitability. For the past 12 months, Halliburton Co's ROIC is 17.25, and its WACC is 10.72.
Conclusion
In summary, Halliburton Co (HAL, Financial) appears to be fairly valued. The company's financial condition is fair, and its profitability is fair. Its growth ranks better than 81.02% of 822 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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