Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Is Halliburton Company (HAL)’s Stock a Screaming Buy?

Impressive cash flows
With operations moving ahead impressively, cash flows have received a solid boost. Cash flows from operations have been impressive this year, shooting up 29.6% to $1.47 billion. And instead of reinvesting all of the earnings back into the business, the company chose to reward shareholders through share buybacks.

At the very least, it’s a shrewd and calculated move on management’s part to keep shareholders happy, after all the negative publicity the company has been receiving. At best, this is what I’m looking for in a company with a solid business and sound balance sheet. After repurchasing shares worth $1 billion in the second quarter, the board has authorized another $4 billion in its stock buyback program. Should we ask for more?

Is the stock looking cheap?
To me, Halliburton currently looks cheaper that its bigger cousin Schlumberger Limited. (NYSE:SLB). While Halliburton is trading at 21 times its earnings, and Schlumberger Limited. (NYSE:SLB)’s trading at only 18 times earnings, the reason I’m not too interested in the P/E multiple is that Halliburton’s bottom line doesn’t reveal its actual profits. Since April 2010, the company has been making provisions for its part in the Macondo oil spill disaster. This has distorted Halliburton’s actual earnings considerably.

It’s the price-to-book ratio that looks interesting. At 2.63 — compared with Schlumberger Limited. (NYSE:SLB)’s 2.96 — Halliburton looks cheaper against its accounting value (book value) of equity. In other words, Halliburton Company (NYSE:HAL)’s assets may not be fully valued.

A Foolish takeaway
Halliburton has managed to be in investors’ good graces, thanks to a combination of solid performance and shareholder-friendly management. Foolish investors must keep a hawk’s eye on this stock.

The article Is Halliburton’s Stock a Screaming Buy? originally appeared on and is written by Isac Simon.

Fool contributor Isac Simon has no position in any stocks mentioned. The Motley Fool recommends Halliburton.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.