Bear of the Day: Halliburton (HAL)

Core Viewpoint - Halliburton Co. is anticipating a soft North American energy services market in 2025, with declining earnings expected this year [1] Financial Performance - Halliburton reported fourth quarter 2024 earnings of $0.70, meeting Zacks Consensus, with only one earnings miss in the last five years [2] - North American revenue fell 7% sequentially to $2.2 billion, driven by lower stimulation activity and decreased fluid services in the U.S. and Canada [3] - International revenue rose 3% sequentially to $3.4 billion, with varied outlooks across segments [3] Regional Performance - Latin America revenue decreased 9% sequentially to $953 million due to lower activity in Mexico and Argentina [4] - Europe/Africa revenue increased 10% sequentially to $795 million, attributed to improved drilling-related services in the North Sea and higher fluid services in Africa [4] - Middle East/Asia revenue grew 7% sequentially to $1.6 billion, driven by higher stimulation activity and increased fluid services [5] Earnings Estimates - Analysts have cut Halliburton's 2025 earnings estimates from $3.05 to $2.67, reflecting a 10.7% decline from 2024 earnings of $2.99 [6] Stock Performance - Halliburton's shares have declined 25.1% over the last six months, including a 6.2% drop in 2025 [7] - The stock trades at a forward P/E ratio of 9.7, indicating it may be undervalued, but declining earnings raise concerns about a potential value trap [7] Cash Flow and Shareholder Returns - Halliburton generated $2.6 billion in free cash flow in 2024, with a share repurchase program and a current dividend yield of 2.6% [8] - Investors may consider waiting for a recovery in North American market conditions before making investment decisions [8]