Primary Vision
  • HOME
  • ABOUT US
    • ABOUT US
    • PRIMARY VISION AI INNOVATIONS
  • RESEARCH
    • INSIGHTS & ARTICLES
    • FREE ARTICLES
  • EVENTS
  • PRESS
  • SUPPORT
  • FAQ
  • LATEST NEWS
  • LOGIN
  • SIGN UP!
    • FRAC SPREAD COUNT SIGN-UP!
    • ENTERPRISE SUBSCRIPTION PLAN SIGN UP!
  • HOME
  • ABOUT US
    • ABOUT US
    • PRIMARY VISION AI INNOVATIONS
  • RESEARCH
    • INSIGHTS & ARTICLES
    • FREE ARTICLES
  • EVENTS
  • PRESS
  • SUPPORT
  • FAQ
  • LATEST NEWS
  • LOGIN
  • SIGN UP!
    • FRAC SPREAD COUNT SIGN-UP!
    • ENTERPRISE SUBSCRIPTION PLAN SIGN UP!
No Result
View All Result
Primary Vision
Home Market Trends

Halliburton Part 2: Estimates And Relative Valuation

Avik Chowdhury by Avik Chowdhury
April 25, 2022
in Market Trends
0
Halliburton Part 2: Estimates And Relative Valuation

  • The revenue estimate is firm for NTM 2023 but may slow down after that
  • EBITDA can stay muted in the next couple of years
  • The stock has a mild downward bias at the current level

Part 1 of this article discussed Halliburton’s (HAL) outlook, performance, and financial condition. In this part, we will discuss more.

Linear Regression Based Forecast

Based on a regression equation among the crude oil price, global rig count, and HAL’s reported revenues for the past seven years and the previous eight-quarters, revenues will increase relatively sharply in the next 12 months (NTM 2023). The revenue growth rate may decelerate in the following two years.

Based on the regression model using the average forecast revenues, the company’s EBITDA is expected to remain unchanged in NTM 2023. However, in NTM 2024, it can decrease.

Target Price And Relative Valuation

Returns potential using HAL’s forward EV/EBITDA multiple (12.4x) is higher (9% downside) than the returns potential using the past average multiple (23% downside). The Wall Street analysts have higher return expectations (13% upside).

Halliburton’s forward EV-to-EBITDA multiple contraction versus the adjusted trailing 12-month EV/EBITDA is steeper because sell-side analysts expect HAL’s EBITDA to increase more sharply than its peers in the next four quarters. This typically results in a higher EV/EBITDA multiple compared to peers. The stock’s EV/EBITDA multiple (17x) is higher than its peers’ (SLB, BHGE, and FTI) average of 13.7x. So, the stock is reasonably valued, with a moderate downside bias, versus its peers at this level.

What’s The Take On HAL?

Even though the crude oil price stays strong, there is a for bit of uncertainty underlies investors’ sentiment, given the geopolitical scenario. In the current environment, energy operators seek returns potential, which can sometimes compensate for the lack of topline growth. Given the context, we expect HAL’s wellbore services will attract more capex. Although the company’s management believes it’s in for a possible multi-year upcycle, it prioritizes short-cycle projects, which entails collaborating and engineering solutions to maximize its asset value. The typical recipient of the recovery will be the onshore shale production-related services, including frac services, which should see pricing going higher. HAL’s Zeus eFleets and SmartFleet Intelligent Fracturing System have been quite prolific in this context. So, the stock price outperformed the VanEck Vectors Oil Services ETF (OIH) in the past year.

On the other hand, infrastructure investments may stay low. The offshore production, typically more capital intensive, will likely stay subdued. Although HAL is deleveraging the balance sheet, it’s still higher than some peers. On top of that, negative cash flows have compounded its problems in early-2022. We think the stock is reasonably valued, although, given the fundamentals and stock price run-up, returns can stay muted in the short term before it makes any robust recovery.

Previous Post

Halliburton Part 1: It Has The Right Value Drivers, But Valuation Can Drag In

Next Post

Baker Hughes Part 1: Various LNG And Renewable Energy Projects Will Drive Business

Related Posts

Halliburton’s Perspective in Q1: KEY Takeaways
Market Trends

Halliburton’s Perspective in Q1: KEY Takeaways

May 16, 2025
STEP Energy Services: Q1 TAKE THREE
Market Trends

STEP Energy Services: Q1 TAKE THREE

May 15, 2025
Market Sentiment Tracker: Demand Holds, Cracks Widen
Market Trends

Market Sentiment Tracker: Demand Holds, Cracks Widen

May 14, 2025
Monday Macro View: What is the connection between Frac Job Count and OPEC’s production? Enterprise Subscribers
Market Trends

Monday Macro View: What is the connection between Frac Job Count and OPEC’s production? Enterprise Subscribers

May 12, 2025
Liberty Energy’s Perspective in Q1: KEY Takeaways
Market Trends

Liberty Energy’s Perspective in Q1: KEY Takeaways

May 12, 2025
KLX Energy Services: Q1 TAKE THREE
Market Trends

KLX Energy Services: Q1 TAKE THREE

May 9, 2025
Next Post
Baker Hughes Part 1: Various LNG And Renewable Energy Projects Will Drive Business

Baker Hughes Part 1: Various LNG And Renewable Energy Projects Will Drive Business

Please login to join discussion

Recent News

Halliburton’s Perspective in Q1: KEY Takeaways

Halliburton’s Perspective in Q1: KEY Takeaways

May 16, 2025
STEP Energy Services: Q1 TAKE THREE

STEP Energy Services: Q1 TAKE THREE

May 15, 2025
FREE READ: Oil Markets Trying to find direction

FREE READ: Oil Markets Trying to find direction

May 14, 2025
Market Sentiment Tracker: Demand Holds, Cracks Widen

Market Sentiment Tracker: Demand Holds, Cracks Widen

May 14, 2025
Monday Macro View: What is the connection between Frac Job Count and OPEC’s production? Enterprise Subscribers

Monday Macro View: What is the connection between Frac Job Count and OPEC’s production? Enterprise Subscribers

May 12, 2025
Primary Vision

Established in 2011, we are renowned for our expert frac data and analytics, providing a rich array of unique indicators and industry commentary.

CONTACT

+1-713-554-4977
info@primaryvision.co

SOCIAL NETWORKS

POLICIES

Privacy Policy
Terms of Use

PARTNERS

Amazon Web Services

TRUSTED SITES

Logo

Logo

RECENT NEWS

Halliburton’s Perspective in Q1: KEY Takeaways

Halliburton’s Perspective in Q1: KEY Takeaways

May 16, 2025
STEP Energy Services: Q1 TAKE THREE

STEP Energy Services: Q1 TAKE THREE

May 15, 2025
FREE READ: Oil Markets Trying to find direction

FREE READ: Oil Markets Trying to find direction

May 14, 2025
Market Sentiment Tracker: Demand Holds, Cracks Widen

Market Sentiment Tracker: Demand Holds, Cracks Widen

May 14, 2025
Monday Macro View: What is the connection between Frac Job Count and OPEC’s production? Enterprise Subscribers

Monday Macro View: What is the connection between Frac Job Count and OPEC’s production? Enterprise Subscribers

May 12, 2025
  • HOME
  • ABOUT US
  • RESEARCH
  • EVENTS
  • PRESS
  • SUPPORT
  • FAQ
  • LATEST NEWS
  • LOGIN
  • SIGN UP!

© 2025 Primary Vision. All rights reserved.

  • HOME
  • ABOUT US
    • ABOUT US
    • PRIMARY VISION AI INNOVATIONS
  • RESEARCH
    • INSIGHTS & ARTICLES
    • FREE ARTICLES
  • EVENTS
  • PRESS
  • SUPPORT
  • FAQ
  • LATEST NEWS
  • LOGIN
  • SIGN UP!
    • FRAC SPREAD COUNT SIGN-UP!
    • ENTERPRISE SUBSCRIPTION PLAN SIGN UP!

© 2025 Primary Vision. All rights reserved.