With a daily loss of -2.84% and a 3-month gain of 27.69%, the stock of Halliburton Co (NYSE:HAL) is attracting attention from investors. The question that remains is whether the stock is modestly overvalued. In this comprehensive analysis, we will delve into the valuation of Halliburton Co to provide an answer.
Halliburton Co is one of the world’s largest oilfield service firms. Its expertise lies in various business lines, including completion fluids, wireline services, and cementing. As the leading pressure pumper in North America and a significant innovator in hydraulic fracturing, Halliburton Co has made a name for itself in the industry.
Currently priced at $41.43 per share, the market cap of Halliburton Co stands at $36.60 billion. When compared to its GF Value of $37.98, it appears that the stock is modestly overvalued.
The GF Value is a unique measure that represents the current intrinsic value of a stock. It takes into account historical trading multiples, past performance and growth, and future business performance estimates. In the case of Halliburton Co, its valuation is based on these factors.
Based on our calculations, Halliburton Co is considered to be modestly overvalued. If a stock’s price is significantly above the GF Value Line, it is considered overvalued, and its future return is likely to be poor. This suggests that the long-term return of Halliburton Co’s stock may be lower than its business growth.
When it comes to financial strength, Halliburton Co has a fair rating of 6 out of 10. Its cash-to-debt ratio is lower than the majority of companies in the Oil & Gas industry, indicating that it carries a fair level of financial risk.
In terms of profitability, Halliburton Co has been profitable for 5 years out of the past 10. With revenues of $22.40 billion and Earnings Per Share (EPS) of $2.72 in the past 12 months, the company’s operating margin is better than the majority of companies in the Oil & Gas industry.
Although Halliburton Co’s average annual revenue growth is lower than most companies in the industry, its 3-year average EBITDA growth is better than the majority. Additionally, the company’s return on invested capital (ROIC) is higher than its weighted cost of capital (WACC), indicating that it is creating value for shareholders.
In conclusion, Halliburton Co (HAL) stock appears to be modestly overvalued. While the company’s financial condition and profitability are fair, its growth outperforms a majority of its industry peers. It’s important to weigh these factors when considering an investment in Halliburton Co.