The oils sector is strong today with the United States Oil Fund LP (USO) hitting its highest level since November 1, 2018. The strength is a product of the United States putting full sanctions in place on Iranian oil and a agreement with Saudi Arabia to make up production shortfalls.
Like the overall market, oil has been running steadily higher after bottoming out on December 24. There is a nice breakout in the USO chart today after formation of a nine day trading range.
Most oil stocks have yet to post earnings for the first quarter of 2019 but Halliburton (HAL) posted numbers this morning and is trading down slightly on the news. HAL posted earnings of $0.23 versus estimates of $0.22. Revenue s were slightly ahead as well but management provided tepid guidance as it sees 'modest progress' for services over the next couple of quarters.
EPS for 2019 is expected to drop 29% to $1.36 but then increase 56% in 2020. With a trailing PE of 18 it is not an exceptional bargain compared to other oil services stocks.
HAL has been a laggard for a while and it is still not cheap enough to be a value play and it definitely isn't strong enough to be a good technical play. There are many stocks with decent growth and single digit PE's in the oil production area such as Penn Virginia (PVAC) . Until the production and exploration companies start gaining momentum it will be hard for service companies like HAL or Schlumberger (SLB) to do the same.
There should be some interesting reports coming up in the oil group. HAL isn't one of them that is going to create much excitement.