Is Halliburton a Good Stock to Buy After Earnings?

The closest peer for Halliburton is larger oilfield services company Schlumberger Limited. (NYSE:SLB). Schlumberger has also reported its fourth quarter earnings, and combined with the current market capitalization of $106 billion it is valued at 19 times trailing earnings. This is a sizable premium, and while its business has been performing slightly better than Halliburton’s in recent quarters and there should be some benefit to being a larger company it is possible that the market is giving Schlumberger too much credit for those factors.

Halliburton can also be compared to Baker Hughes Incorporated (NYSE:BHI), Weatherford International Ltd (NYSE:WFT), and Cameron International Corporation (NYSE:CAM), three other equipment and services companies. Baker Hughes, which is best known for its brand name drill bits, experienced a 32% decline in earnings last quarter versus a year earlier. At 15 times trailing earnings, we would need to be quite confident in a recovery to recommend it over Halliburton. Cameron has been reporting significant growth on both top and bottom lines, though looking at the earnings multiples some future growth has already been priced in. The sell-side is bullish and so the five-year PEG ratio is 0.9. It would be more “growth at a reasonable price” than value, but possibly still worth considering. Weatherford might be another candidate, at 12 times earnings consensus for 2013, though that company’s net income has been down as well despite higher revenue. As a result the stock has fallen 23% since last year.

In terms of earnings multiples Halliburton is fairly cheap compared to its most common comparison, Schlumberger, though of course it should be somewhat concerning that earnings growth has been stagnant and that would be a point to focus on during further analysis of the company. Cameron and Weatherford might also be targets for further research.

Disclosure: I own no shares in any stocks mentioned in this article.