HAL Fundamental Research Investment Analysis, Halliburton Company

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Halliburton Company (HAL)

The Razor's Edge

2-Year Price History

Recent Price
(1/7/2009)
$20.69
52-Week Price
$12.80 - $55.38
Market Capitalization
$18.5 Billion
Dividend Yield
1.70%
Most Recent Dividend
$0.35

About Halliburton Company

Halliburton Company is considered to operate in the Basic Materials sector. They specifically operate in the Oil & Gas Equipment/Services business segment contained within the Energy industry.

The Company provides a range of services and products for the exploration, development and production of oil and gas around the world.

Ockham's Rating

Rating Specific Information Withheld Premium Access Only

HAL Revenue

For a long time, value investors have used the current share price relative to sales per share levels as an important valuation tool. We utilize a historical weighted average methodology that treats recent years more importantly in the calculation. When looking at HAL through this framework, we can see that our weighted average historical high and low Price to Sales per share ratios over the last 10 years are 1.72x and 0.99x respectively.

Utilizing this range we can see that HAL’s current Price to Sales per share ratio of 0.85x is significantly below its average levels historically. In fact, with a current price of $19.45, HAL is a full 38% below its average Price to Sales ratio at comparable sales levels. This is a rare occurrence and, when taken in context of the other areas of our analysis, can be a strong positive for our outlook for HAL.

HAL Cash Earnings

Looking at HAL specifically in their Cash Earnings capabilities, Ockham views HAL as significantly below their historical average multiples of Cash Earnings, as calculated by our proprietary analysis. It is incredibly important to understand that for HAL, the current level of Cash Earnings compared to its historical levels helps identify where HAL is in relation to what the investing community was willing to pay for this level of Cash Earnings in the past. With a historical high Cash Earnings per share ratio of 12.33 and a historical low Cash Earnings per share ratio of 7.26, an investor can relate where value becomes optimal.

So what does "significantly below" mean when we talk about Price to Cash Earnings numbers for HAL? From the Ockham perspective, we are looking specifically at HAL to see if the market is recognizing the huge disparity between HAL's past stock price to Cash Earnings ratio to today's levels. At a difference of 55% below the average historical Price to Cash Earnings ratio, our view would be quite positive at this point. However, as with all metrics, we need to also take other factors into account when looking at HAL. While we view better Cash Earnings metrics as very important, if the market is slow to identify this value, or if Cash Earnings were to fall from these levels, we would become more neutral in our stance.

HAL Dividends

A positive Ockham rating does not require a company to pay out an inviting dividend or a dividend at all. However, we believe dividends provide a useful measure on a company's inherent expectations.

Comparable to our analysis of Sales and Cash Earnings per share, we examine dividend yields from HAL against the historic high and low levels over an available data range. Because HAL has an established history of paying a dividend to shareholders, there is value in comparing recent dividends to historical dividends. In HAL’s case, the estimated annual dividend is $0.36 producing a current dividend yield of 1.85%. The highest dividend yield from HAL in recent history was 5.81% while the lowest dividend yield was 0.65%. While it is quite common for a growth stock to pay no dividend at all, but for a mature company such as HAL that has a history of paying dividends it is disappointing to see their dividend yield drop so significantly. At this time, the current dividend yield is 42.72% below the median yield.

Peer Comparison

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Halliburton Company Industry Grouping

(1/7/2009)
Company Ticker Market Cap (Ml) Latest
Price
Price/Cash Earnings Price/Sales 5-Yr. Rev.
Growth Rate
5-Yr.
Avg. ROE.
Current 10-Yr. Range* Current 10-Yr. Range*
Peer Company Averages (not incuding HAL) 5.05 3.14 » 18.05 1.14 1.73 » 13.77 18.87% 19.18%
*10 year range does not include current year values
Sasol LTD ADR SSL $19.1 Billion $32.09 6.88 3.13 » 15.05 0.98 0.87 » 9.93 11.49% 24.10%
Halliburton Company HAL $18.5 Billion $20.69 4.44 3.54 » 23.38 0.85 0.95 » 8.61 4.08% 23.85%
Anadarko Petroleum Corp. APC $18.4 Billion $40.14 4.80 2.69 » 18.00 1.32 1.23 » 13.16 32.71% 22.08%
Hess Corp. HES $18.2 Billion $55.85 3.43 2.22 » 9.94 0.49 0.35 » 3.62 21.54% 18.30%
YPF Sociedad Anonima ADR YPF $18.2 Billion $46.25 6.69 2.00 » 10.32 1.74 1.16 » 11.69 9.64% 20.10%
Transocean Limited RIG $17.5 Billion $54.91 3.45 5.64 » 36.93 1.16 5.01 » 30.46 18.99% 11.32%
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Key Fundamentals

HAL - Halliburton Company Fundamentals
Price (1/7/2009) $20.69
Volume (1/7/2009) 26.3 Million
10 Day Average Volume 14.2 Million
13 Week Price Range $12.80 - $23.48
52 Week Price Range $12.80 - $55.38
LTM Revenue $17.5 Billion
 
Shares Outstanding (12/2007) 893.8 Million
Market Capitalization $18.5 Billion
Shares Held By Institutions 750.0 Million
Insitutional Holders 989
% Shares Held By Institutions 83.90%
Earnings Per Share (EPS) $3.68
P/E Ratio 10.80
Book Value Per Share $8.31
 
Gross Margin 26.70%
Quarterly Dividend 0.36
Dividend Yield 1.70%
Beta 1.79
Fiscal Year Ends December