Earnings preview: Sentiment remains bleak around Halliburton’s Q2 2019 results

Halliburton Company (NYSE: HAL) is scheduled to report second quarter 2019 earnings results on Monday, July 22, before market open. Both revenue and earnings are expected to decline on a year-over-year basis. Analysts have projected earnings of $0.30 per share on revenue of $5.97 billion.

In the last four quarters, the company has beaten earnings estimates only twice. For the second quarter, the general sentiment around Halliburton’s performance appears bleak. The company’s challenges from last quarter are likely to continue, namely weakness in its main region and strategic changes in the capital allocation plans of major oil companies.

Most of the leading oil companies are now focusing on improving their shareholder returns rather than overspending on production and expansion activities. This approach is likely to hurt service providers like Halliburton due to lower demand.

The company has also been seeing weakness in North America, which is its main region and this is likely to have a negative effect on its quarterly results. However, Halliburton’s international operations continue to be strong and this momentum is likely to continue in the second quarter as well.

In the first quarter of 2019, Halliburton topped market estimates on revenue while earnings matched expectations. Total revenue remained flat at $5.7 billion while adjusted EPS fell 44% to $0.23.

Revenues declined in the Completion and Production segment while the Drilling and Evaluation segment posted single-digit revenue growth. Revenues in the North America region fell 7%, mainly due to lower prices for stimulation services, but revenues across all the international regions saw increases.

Halliburton’s shares have dropped 52% in the trailing 52 weeks and over 19% year to date. The stock was down 2% in mid-day trade on Thursday.

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