Halliburton Company (HAL), Schlumberger Limited. (SLB): Should Investors Buy These Big Buybacks?

For example, in warning that its quarter would be rough, Nabors Industries Ltd. (NYSE:NBR) said that it saw weakness in the North American pressure-pumping business while noting that intense competition was really crimping its results. This caused the company to miss earnings estimates by 23% this past quarter. Similarly, Baker Hughes Incorporated (NYSE:BHI) reported that while its pressure-pumping business was improving, it’s not driving the company’s business because of competition. On the other hand, oil-field services are booming internationally as well as in the deepwater of the Gulf of Mexico where Baker Hughes, in particular, saw record performance.

It would seem as though there is just too much capacity and competition onshore in North America for oil-field service providers to make the returns you’d expect in light of the fact that oil production in the U.S. is booming. That’s why industry consolidation would appear to be a much better way for these companies to spend the money being earmarked for buybacks. It would only strengthen the lead these two have over the rest of the competition.

The article Should Investors Buy These Big Buybacks? originally appeared on Fool.com.

Fool contributor Matt DiLallo has no position in any stocks mentioned. The Motley Fool recommends Halliburton.

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