Halliburton Company (HAL)’s Improved, but Plenty of Work Left to Do

International expansion still the growth driver
Even with the better-than-expected performance, the Street is not so certain about Halliburton’s ability for the next quarter. Average EPS estimates have declined $0.04 from a prior profit of $0.63 per share. Likewise, for the full fiscal year, earnings have been trimmed to $2.97 per share from prior estimates of $3, all of which occurred over the past three months.

Despite the slightly pessimistic outlook, Dave Lesar, Halliburton’s chairman, president, and CEO, had this to say about the Q4 performance:

From a revenue perspective, we set new records this year in all of our regions and both of our divisions. From an operating income perspective, we achieved new records in our Latin America region and in five of our 12 product lines. In the fourth quarter, revenue of $7.3 billion was up 3% sequentially and represents the highest quarterly revenue in company history. All three of our international regions and eight of our 12 product lines set new revenue records.

Lesar clearly is steering this ship in the right direction. He also touched on one of the most critical aspects in this sector, which is international growth. This is something Schlumberger has used to its advantage, which has helped the company offset weakness in North America. Conversely, 56% of Halliburton’s revenue comes from North America, versus 32% from Schlumberger.

That Halliburton was able to log 20% revenue growth in international markets was encouraging, especially since the company shed 5% in international revenue in the prior quarter. This means that international markets comprised 39% of Halliburton’s overall profit growth, proving that this new strategy not only is working well, but is also much quicker than even Halliburton expected.

Remarkably, the company is now outgrowing Schlumberger in international business. But will it be enough to make a meaningful dent in Schlumberger’s market dominance? In the meantime, Halliburton has developed an advantage that it didn’t have before; an ability to offset North American weakness caused by the glut of natural gas. Considering that the stock has surged almost 10% since the report, the Street agrees. Remarkably, even as shares are now resting near 52-week highs, the stock still looks cheap.

The article Halliburton’s Improved, but Plenty of Work Left to Do originally appeared on Fool.com and is written by Richard Saintvilus.

Fool contributor Richard Saintvilus has no position in any stocks mentioned. The Motley Fool recommends Halliburton.

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