Halliburton Stock Hits 52-Week Low: Time to Buy or Bail?

Core Viewpoint - Halliburton Company (HAL) has experienced a significant decline in stock value, hitting a 52-week low of $25.16, reflecting a nearly 21% drop over the past year, primarily due to its heavy reliance on North American operations facing pricing pressures and reduced drilling activity [1][4]. Company Performance - Halliburton's stock has underperformed compared to the Zacks Oil and Gas Field Services industry, which gained 9.9%, and its peer SLB, which fell 10% during the same period [1]. - The company generates over 40% of its revenues from North America, making it more susceptible to regional economic slowdowns compared to peers like SLB and Baker Hughes, which derive only 20-25% of their revenues from the region [3]. Financial Estimates - The Zacks Consensus Estimate for Halliburton's 2025 EPS has decreased by 10% over the past 30 days, from$ 2.97 to $2.67 [4]. - Current estimates for the upcoming quarters and years show a decline in expected EPS, with the current year (2025) estimate at$ 2.67, down from $3.11 two months ago [5]. Revenue Trends - North American revenues fell by 8% year-over-year in 2024, with expectations of further low- to mid-single-digit declines in 2025 due to lower negotiated pricing for pressure pumping services [6]. - The U.S. rig count is trending downward, contributing to a slowdown in completion activity and oil demand growth [6]. Profitability Challenges - Halliburton's Completion & Production operating margin was 20% in the December quarter, but a sequential decline of 1.75-2.25% is expected in the January-March period [7]. - The company faces margin compression, with operating margins in the Completion & Production segment declining by 49 basis points due to weaker North American stimulation activity [8]. Tax and Cost Pressures - Rising tax expenses are projected to increase by 300 basis points to 25.5% in 2025, alongside higher interest costs, threatening Halliburton's ability to maintain strong margins [9]. International Growth Outlook - While international revenues grew by 6% in 2024, growth is expected to stall in 2025, primarily due to a decline in activity in Mexico [10]. - Excluding Mexico, international revenues are projected to grow at a low- to mid-single-digit rate, insufficient to offset losses in North America [10]. Valuation Concerns - Halliburton's stock trades at a forward Price/Earnings multiple of 9.77X, which is higher than its three-year low of 8.10X, raising concerns about the justification of this premium given declining revenues and margin pressures [12]. Positive Developments - The company is investing in advanced drilling technology and artificial lift, which are expected to generate$ 2.5- $3 billion in annual revenues over the next three to five years [13]. - Halliburton continues to generate solid free cash flow, reporting$ 1.1 billion in Q4 2024 and $2.6 billion for the full year, with a focus on capital discipline [14]. Final Assessment - Given the heavy North American exposure, margin compression, and slowing international growth, Halliburton's outlook for 2025 appears challenging, leading to a Zacks Rank of 5 (Strong Sell) [16][17].