The first half of 2012 is in the rearview mirror, and investors are gearing up for what looks to be an action-packed ending. There are bound to be some big winners -- and more than a few duds -- no matter what happens in the United States and abroad.
Will your favorite stock have its victory lap as we hit the home stretch, or will it get passed by? First-half performances can hold some clues, so let's look to the recent past to find out whether Halliburton (NYSE: HAL ) deserves a place in your portfolio going forward.
Halliburton started the year on a positive note with solid fourth-quarter results and got more good news when BP's (NYSE: BP ) contentious court battle had a major ruling, absolving the oil services company of greater liability. That high note didn't last long:
Here are a few financial snapshots of its recent performance:
|Market Cap||$26.1 billion|
|TTM Revenue||$26.42 billion|
|TTM Net Income/Loss||$2.96 billion|
|TTM Free Cash Flow||$822 million|
|MRQ Revenue||$6.87 billion|
|MRQ Net Income/Loss||$627 million|
|MRQ Free Cash Flow||($48 million)|
|MRQ Revenue / Net Income Year-Over-Year Change||30% / 22.7%|
|P/E and Forward P/E||8.4 / 7.3|
|Price to Free Cash Flow||31.8|
|Motley Fool CAPS Rating (out of 5)||****|
Source: Morningstar. TTM = trailing 12 months. MRQ = most recent quarter.
What the numbers don't tell you
Halliburton, along with drilling-services peers Schlumberger (NYSE: SLB ) and Baker Hughes (NYSE: BHI ) , turned in a trifecta of solid first-quarter results this spring. That didn't stop the three companies from descending toward low points in the second quarter. Since the stock-price declines weren't tied to falling profit, it's meant that this trio of companies is trading at its lowest set of valuations in years:
Despite all the positive news early this year, Halliburton shareholders have also had some cause for concern. Fool analyst Jason Moser thinks the stock's attractively valued but attributes its share-price slide to market pessimism over a strategic shift.
Crude oil drilling has been on the upswing, but the long nat-gas glut appears to be drawing to a close, as my fellow Fool Travis Hoium pointed out last month. Halliburton's hydraulic fracturing expertise could wind up a liability if nat-gas producers continue to reduce their operations. Chesapeake Energy (NYSE: CHK ) , which has had plenty of problems of its own, has been key to that strategic shift. The second-biggest nat-gas extractor cut its production early this year.
Halliburton's diversified enough to weather the nat-gas pullback, with IT services and other oilfield support. Since the company's one of the leading developers of nat-gas extraction technology, any inevitable uptick in nat-gas exploration will be a boon to Halliburton's still-growing bottom line. One thing to be wary of, however, is Halliburton's history of market underperformance. Since 1980, Halliburton's shares have returned far less than simply investing in a dividend-paying index fund. Will that trend be turned on its head in the second half of 2012? We'll have to wait and see.
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