Halliburton Q2 Earnings on Deck: Here's How It Will Fare - Equinor (NYSE:EQNR), TechnipFMC (NYSE:FTI)

　　Halliburton CompanyHAL is set to release second-quarter results on Jul 19. The current Zacks Consensus Estimate for the to-be-reported quarter is a profit of 80 cents per share on revenues of $6 billion.

　　Let's delve into the factors that might have influenced the oilfield service firm's performance in the September quarter. But it's worth taking a look at HAL's previous-quarter performance first.

　　Highlights of Q1 Earnings & Surprise History

　　In the last reported quarter, this Houston, TX-based provider of technical products and services to drillers of oil and gas wells beat the consensus mark due to strength in the international markets, partly offset by weak performance in the North American region. Halliburton had reported adjusted net income per share of 76 cents, surpassing the Zacks Consensus Estimate of 74 cents. Revenues of $5.8 billion also came above the Zacks Consensus Estimate by some $121 million.

　　HAL beat the Zacks Consensus Estimate in each of the last four quarters, which resulted in an average earnings surprise of 3.9%. This is depicted in the graph below:

　　Halliburton Company Price and EPS Surprise

　　Halliburton Company price-eps-surprise | Halliburton Company Quote

　　Trend in Estimate Revision

　　The Zacks Consensus Estimate for the second-quarter bottom line has remained unchanged in the past seven days. The estimated figure indicates a 3.9% improvement year over year. The Zacks Consensus Estimate for revenues, meanwhile, suggests a 2.6% increase from the year-ago period.

　　Factors to Consider

　　After bouncing strongly from the depths of the pandemic, the oil and natural gas rig count in the United States has been gradually declining over the past year or so. Consequently, drilling activity — an important factor for services companies — has hit a speed bump. In the United States, a region on which Halliburton is highly dependent, the rig count has gone down around 15% from a year ago. The steady decline in rig count is worrying for contracting activity.

　　Consequently, our expectation for second-quarter revenues for the North American region is pegged at $2.6 billion, indicating a 2.1% drop from the year-ago quarter on the back of a soft operating environment. This is likely to have weighed on the company's earnings and cash flows.

　　On a further bearish note, the increase in HAL's costs might have dragged down the company's to-be-reported bottom line. Going by our model, the company's second-quarter cost of sales is likely to have totaled $4.8 billion, up 1.9% from the year-ago period. The upward cost trajectory could be attributed to the prevailing inflationary environment.

　　But giving some respite to the company, our projection for the second-quarter operating income of Drilling & Evaluation segment is pegged at $417.3 million, indicating an 11% improvement from the year-ago quarter on the back of Halliburton's strategic positioning in key markets and its capability to capitalize on regional demand surges, especially in the Middle East and certain countries of Latin America.

　　What Does Our Model Say？

　　The proven Zacks model does not conclusively show that HAL is likely to beat estimates in the second quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. But that's not the case here.

　　Earnings ESP:Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, for this company is -0.23%.

　　Zacks Rank:Halliburton currently carries a Zacks Rank #4 (Sell).

　　Stocks to Consider

　　While an earnings beat looks uncertain for Halliburton, here are some firms from the energy space that you may want to consider on the basis of our model:

　　Expro Group Holdings N.V.XPRO has an Earnings ESP of +2.04% and a Zacks Rank #2. The firm is scheduled to release earnings on Jul 25.

　　Expro Group Holdings has a trailing four-quarter earnings surprise of 78.4%, on average. Valued at around $2.5 billion, XPRO has gained 14.7% in a year.

　　Equinor ASAEQNR has an Earnings ESP of +1.55% and a Zacks Rank #3. The firm is scheduled to release earnings on Jul 24.

　　Notably, the Zacks Consensus Estimate for Equinor's 2024 earnings per share indicates 0.9% year-over-year growth. Valued at around $80 billion, EQNR has gained 1.9% in a year.

　　TechnipFMC plcFTI has an Earnings ESP of +9.21% and a Zacks Rank #3. The firm is scheduled to release earnings on Jul 25.

　　TechnipFMC beat the Zacks Consensus Estimate for earnings in three of the last four quarters and missed in the other. It has a trailing four-quarter earnings surprise of 5.4%, on average. Valued at around $11.5 billion, FTI has gained 62.9% in a year.

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