Think Twice About Buying the 20% YTD Dip in Halliburton Stock

Core Viewpoint - Halliburton Company (HAL) is facing significant challenges, with a notable decline in stock performance and disappointing quarterly results, suggesting caution for potential investors [1][4][13] Financial Performance - Halliburton reported adjusted net income per share of 73 cents for Q3, missing the Zacks Consensus Estimate of 75 cents and down from 79 cents in the previous year [4] - Revenues decreased by 1.8% year over year to $5.7 billion, falling short of projections of$ 5.8 billion [4] - North American revenues dropped 8.5% year over year to $2.4 billion, significantly impacting overall performance [5] Market Exposure - Approximately 40% of Halliburton's revenues come from North America, making it more vulnerable to regional downturns compared to peers like SLB and Baker Hughes, which have 20% and 25% exposure, respectively [6] - The North American market is expected to face seasonal budget exhaustion, potentially affecting full-year revenues and margins [7] International Operations - The international segment showed modest growth of 4% year over year, but faced challenges such as decreased drilling activity in the North Sea and project delays in the Middle East [8] Cybersecurity Issues - A cybersecurity breach in Q3 disrupted billing and collection processes, impacting free cash flow and earnings per share by an estimated 2 cents [9][10] - The incident led to a temporary suspension of the share repurchase program, limiting shareholder returns [10] Earnings Estimates - Earnings estimates for Halliburton have been revised downward, with 2024 EPS projections dropping by 4% to$ 3.00 and 2025 estimates falling by over 8% [11] Valuation Perspective - Halliburton is trading at a forward price-to-earnings (P/E) ratio of 9.33, which is above its 3-year low of 8.10, raising concerns about the justification of this premium given the company's challenges [11] Conclusion - Given the weak Q3 results, ongoing challenges in North America, international headwinds, and cybersecurity issues, Halliburton stock is considered a risky investment at this time [13]