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Halliburton Stock Price: Cost Cuttings Could Briefly Hinder The Declining Trend

Halliburton (NYSE: HAL) stock price received some support from its third-quarter results despite mid-single-digit revenue decline. The company sparked investor’s sentiments through its aggressive cost cuttings and operational efficiencies.

Halliburton shares lost almost 30% of its value since the beginning of this year. Trader’s concerns over lower investment activities in the oil and gas sector impacted Halliburton stock price performance.

Its shares are currently trading around $20, down from the 52-weeks high of $35 a share. Halliburton shares are down more than 60% from an all-time high of $60 that it had hit three years ago.

HAL Halliburton Company weekly Stock Chart

Third Quarter Result Offers Support to Halliburton Stock Price

Halliburton continues to experience headwinds from its North American operations. Disciplined capital spending from E&P companies is negatively impacting HAL’s revenues. It’s North American revenue plunged 10% from the previous quarter.

On the positive side, international markets recovered modestly in the third quarter. Its revenue from international markets grew 10% year to date compared to the past year. The company anticipates high single-digit growth in revenue from international markets this year.

Moreover, the company has significantly reduced its cost structure to mitigate the impact of negative revenue growth. The company recently announced to cut 650 jobs from North America. It is also working on operational efficiencies to improve margins.

On the back of cost cuttings, its third-quarter operating earnings declined only 3% from the previous quarter. It reported a net income of $0.34 per diluted share in Q3.

HAL is taking costs out more aggressively than the Street forecast, which it expects to lead to strong Q4 operating margin improvement in the Drilling & Evaluation segments despite falling revenue,” says AKap Energy’s Anish Kapadia.

North American Region Limits Halliburton Shares Upside

HAL’s North American third-quarter revenue declined almost 21% year over year and 10% sequentially. The company warned investors about the acceleration of downtrend.

The CEO expects Q4 revenue for its hydraulic fracturing business to drop at low double digits from the third quarter; the margins are likely to decline by 125-175 basis points. Overall, market pundits are expecting Halliburton stock price to remain range-bound with little upside potential.

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Based in Saudi Arabia, Siraj has a strong understanding of and passion for accounting and finance. He has worked for international clients for many years on several projects related to the stock market, equity research and other business, accounting and finance related projects. Siraj is a published financial analyst on the world's leading websites including SeekingAlpha, TheStreet, MSN, and others.