Every investor dreams of buying low and then selling high. However, buying a stock at the bottom requires a whole lot of luck and even more patience. That said, every now and again just such an opportunity arises for investors. That's exactly where we find Halliburton Company's (NYSE:HAL) stock, which fell 21% last year and is now nearly 42% off of its 52-week high.

Obviously Halliburton's stock is cheaper than it was, but is it as cheap as it has ever been? To know that we need to take a little trip down memory lane to see how the company's valuation now compares to its valuation of yesteryear.

Building our basket
As most savvy investors know, a stock's price and its value are very different. A stock might be at its 52-week high but still represent a better value than it did at a low because earnings have increased substantially. What matters more than price is the underlying earnings generated by a business. However, even those earnings can sometimes be masked by one-time items such as writedowns or other charges, which is why I like to use a basket of valuation multiples when looking at a stock.

Our basket will hold Halliburton's stock price; its price-to-earnings, or P/E, ratio; and its enterprise value-to-EBITDA, or EV/EBITDA, ratio. I always like to include that last one because it gives a better look at the value of the cash generation of the business as a whole. Here's how these three metrics have trended over the past decade at Halliburton.

HAL data by YCharts.

Note that Halliburton's current stock price of about $43 is nowhere near its historical low, but its valuation metrics of P/E and EV/EBITDA are much closer to their historical bottoms. For example, the P/E ratio of just over 10 times earnings is in line with the company's 2012 low when oil prices dipped, and is closing in on its 2009 low when oil prices last crashed. Likewise, the EV/EBITDA ratio is more akin to the 2012 dip than to the 2009 bottom. So Halliburton's stock is on sale, but it's not yet in the bargain bin. That's particularly true when considering earnings are likely to worsen over the next year due to the downturn in oil prices. 

A closer look at the merchandise
All that being said, we should also consider the company's business now compared to its business in the past. We'll focus on a basket of ratios measuring various returns generated by the business.

HAL Return on Equity (TTM) data by YCharts.

Here we see Halliburton's returns are well off their peak in 2008-2009, as well as the improvement heading into 2012. This shows the underlying business, while solid, isn't at its peak performance at the moment. Furthermore, its performance is also likely to drop over the next year due to the downdraft in the price of oil. In a perfect world, the company's returns would be at an all-time high and its valuation at an all-time low.

However, it's also important to remember these metrics are all backward looking, which means they are not a crystal ball into the future. Returns will be affected by the duration of the downturn and by Halliburton's merger with Baker Hughes (NYSE:BHI). The company sees that deal yielding $2 billion in annual cost synergies by 2017, which could juice returns over the long term. However, for our exercise we'll simply note that Halliburton isn't at its best just yet. 

Investor takeaway
Halliburton's stock might not be at a historical bottom, but it's still pretty cheap. Meanwhile, the company's returns aren't at their peak and are likely heading south for the time being. However, there is hope that its best days still lie ahead if its pending merger with Baker Hughes can provide a big boost to the business. Today might not be the best time ever to buy, as Halliburton's stock has yet to be tossed into the bargain bin, but this still appears to be as good a time as we've seen in quite a while.