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Halliburton Company (HAL) Earnings: The Key to Future Growth

Halliburton CompanyHalliburton Company (NYSE:HAL) will release its quarterly report next Monday, and judging from the stock’s gains over the past year, investors are convinced that the company has fully recovered from the Gulf oil spill tragedy three years ago. Yet the question remains whether the Halliburton Company (NYSE:HAL) earnings report will show the growth that investors need to see to justify their optimism.

Halliburton is a big player in the U.S. domestic oil-services industry, with a substantial presence both in undersea drilling and on shore. That left the company exposed to production slowdowns when land-based exploration and production companies were suffering from low natural-gas prices, but now that those prices have started to rise, greater activity could boost the oil-services company’s revenue going forward. Let’s take an early look at what’s been happening with Halliburton Company (NYSE:HAL) over the past quarter and what we’re likely to see in its quarterly report.

Stats on Halliburton

Analyst EPS Estimate $0.72
Change From Year-Ago EPS (10%)
Revenue Estimate $7.25 billion
Change From Year-Ago Revenue 0.2%
Earnings Beats in Past 4 Quarters 3

Source: Yahoo! Finance.

What will the Halliburton earnings report say about growth?
In recent months, analysts have raised their earnings views about Halliburton Company (NYSE:HAL), raising their June-quarter estimates by $0.02 per share, and their full-year consensus by almost 6%. The stock has responded quite favorably, rising more than 13% since mid-April.

Halliburton’s share-price gains began early in the quarter after the company reported its first-quarter results. Although the company took a massive $637 million charge related to the 2010 Gulf disaster, Halliburton managed to hold its own on the domestic front in a weak environment. Internationally, the company cleaned up, with sales rising 21% and at more than twice that rate in the Eastern Hemisphere. But, perhaps most importantly, Halliburton Company (NYSE:HAL) looked favorably on the near-future for domestic drilling, noting gains in margins, and some pricing power expected to enhance profitability from rising well production. That’s consistent with the results we saw from Schlumberger Limited. (NYSE:SLB) this morning, as the industry leader beat earnings expectations with a nearly 50% jump in its net profits, coming largely from overseas activity, but also posting a 2% revenue increase in North America.

One challenge for Halliburton, though, is that exploration and production companies are getting savvier about their expenses, getting more efficient with drilling practices. Competitor Nabors Industries Ltd. (NYSE:NBR) cut its second-quarter guidance recently, citing such efficiency gains as having reduced demand for North American pressure-pumping equipment and services. If those trends carry throughout the sector, it could weigh on Halliburton Company (NYSE:HAL)’s results.