Halliburton's A-Bubblin' A Win Over Expectations

By Glenn Curtis | March 16, 2009 AAA

The market landscape is now cluttered with companies that have missed earnings expectations and let down investors. Given the strain on the domestic economy, there is no surprise here. But contrary to popular belief, some companies actually have exceeded analyst estimates in the most recent quarter.

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Of course, a company's quarterly performance against expectations does not guarantee similar future successes. On the other hand, a recent positive outcome could be a harbinger of things to come.

Companies that beat estimates for the recent quarter:


Company Market Capitalization EPS Actual EPS Estimate
Bristol-Myers Squibb
(NYSE:BMY)
$39 billion $0.46 $0.41
ConAgra Foods
(NYSE:CAG)
$6 billion $0.43 $0.37
Cisco Systems
(Nasdaq:CSCO)
$88 billion $0.32 $0.30
Halliburton
(NYSE:HAL)
$14 billion $0.82 $0.73
Williams-Sonoma
(NYSE:WSM)
$985 million ($0.10) ($0.12)
Data as of March 11, 2009, Intraday





Powerful Texas Tea

Discussing Halliburton in greater detail, a pretty big demand for oil remains, despite efforts to make people go green. For the imminent future, the need for so-called black gold will persist. After all, machinery, cars and other mechanisms require the commodity to run. (To learn more about this sector, check out our Oil And Gas Industry Primer.)

The Texas-based company designs drilling programs and provides engineering support. Therefore, the nation's and the world's dependence on oil is a big reason why this company could have a very bright future. But things haven't exactly been rosy lately, as the market's collapse has had a strong impact on Halliburton's share price. According to Yahoo! Finance, its stock is down more than 50% over the last 52 weeks. Given demand, however, a comeback could be right around the corner. The company is coming off a better than expected fourth quarter. Excluding gains, the company earned 82 cents per share in the period ended December 31, 2008 - a much better showing than the 73 cents the Street had been expecting.

Despite the pervasive doom and gloom in the overall marketplace and the dip in oil prices over the last few months, Halliburton is expected to do pretty well on the earnings front going forward. According to Yahoo! Finance, the company is expected to earn $1.68 per share in 2009 and $1.76 per share in 2010. That means it is trading at roughly 9.4 times the current year's estimate and at approximately 9 times the 2010 estimate. In addition, Director James Boyd purchased 2,000 shares at $16.60 per share in February, signaling a healthy vote of confidence in the stock. Finally, the forward dividend yield is just over 2%. While this is not a huge percentage, the yield amounts to a nice bonus in the current market environment.

The Rest Of The Field

By way of reference, oilfield services company Schlumberger (NYSE:SLB) is expected to earn $2.90 per share in 2009 and $2.87 per share in 2010. It trades at approximately 13.4 times the current year's estimate and at roughly 13.5 times the 2010 estimate. Meanwhile, Texas-based Baker Hughes (NYSE:BHI) is expected to earn $2.90 per share in the current year and $2.99 per share in 2010. It trades at approximately 9.9 times the current year's estimate and at roughly 9.6 times the 2010 estimate.


Bottom Line

Companies that beat estimates in one quarter will not necessarily do so in future quarters. But very often, companies that beat estimates are worth a closer look. (For further reading on the importance of estimates, read Surprising Earnings Results.)


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