Last update on 2024-06-05

Halliburton (HAL) - Piotroski F-Score Analysis for Year 2023 (Final Score: 9/9)

Piotroski F-Score Analysis of Halliburton (HAL) in 2023 reveals a perfect score of 9/9, indicating excellent financial health.

Short Analysis - Piotroski Score: 9

We're running Halliburton (HAL) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

The Piotroski F-Score helps identify strong, undervalued stocks based on profitability, liquidity, and operating efficiency. Halliburton (HAL) secured a perfect Piotroski Score of 9, signaling a robust financial position. Recent trends show consistent profitability, with net income positively trending over the past few years. The company also demonstrates strong cash flow, improved Return on Assets (ROA), and effective cash generation from operations. Additionally, Halliburton has seen declining leverage, a rising current ratio, and share buybacks, indicating strong liquidity. Their gross margin and asset turnover ratios are also on the rise, contributing to their strong performance in the Piotroski model.

Insights for Value Investors Seeking Stable Income

Based on Halliburton's perfect Piotroski Score of 9 and improving financial indicators, it is recommended for potential investors to look into HAL as a viable investment opportunity. The company's profitable trends, strong cash flow, and efficient operations suggest that it is in a healthy financial state, and the upward trends in key financial metrics indicate promising growth potential. However, investors should also consider other aspects such as industry performance and broader market conditions before making a decision.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Halliburton (HAL)

Company has a positive net income?

Net income assesses a company's profitability. A positive net income signals profitability, a key indicator of financial health for investors.

In 2023, Halliburton's net income stands at $2,638,000,000, which is positive. Over the last 20 years, the company has experienced both profitable and unprofitable years, including notable losses in 2003, 2004, 2015, 2016, 2017, and 2020. However, consistent profitability in recent years, with net incomes of $1,457,000,000 in 2021, $1,572,000,000 in 2022, and now $2,638,000,000 in 2023, indicates a favorable trend. Therefore, this positive trend earns Halliburton one point in the Piotroski Analysis.

Company has a positive cash flow?

Cash Flow from Operations (CFO) is crucial as it indicates the cash generated by a company's regular business operations, providing insight into its ability to generate sufficient cash to maintain and grow operations.

Halliburton's CFO for 2023 stands at $3.458 billion, a positive indicator and merits an additional point. Looking at the historical data over the last 20 years, the CFO values for HAL have shown a positive trend for most of the years, with notable upticks in years like 2011 ($4.447B) and 2006 ($3.657B). There are only a couple of negative outliers such as in 2003 (-$775M) and 2016 (-$1.703B). Generally, HAL has maintained a consistent ability to generate positive cash flows from its operations, enhancing its financial stability and market position.

Return on Assets (ROA) are growing?

Return on Assets (ROA) measures a company’s profitability relative to its total assets, indicating how efficiently the company is using its assets to generate earnings. An increasing ROA shows improving efficiency, crucial for investor confidence.

In 2023, Halliburton (HAL) reported a Return on Assets (ROA) of 0.1101, up from 0.069 in 2022. This signifies an improvement and operational efficiency as HAL has managed to generate higher earnings from its assets. When compared to its 20-year historical performance, HAL's ROA has significantly increased from the previous year, adding 1 point to its Piotroski Score. This trend highlights a positive development despite operating in an industry where the median ROA generally ranges higher. However, it is worth noting that even with the improvement, HAL’s ROA remains significantly below the industry median 2023 ROA of 0.2368, indicating there is still considerable room for growth to match industry standards.

Operating Cashflow are higher than Netincome?

The criterion assesses if the company's operating cash flow exceeds net income, indicating robust cash generation. Positive result suggests efficient income conversion.

In 2023, Halliburton (HAL) generated an operating cash flow of $3.458 billion, surpassing its net income of $2.638 billion. This alignment earns Halliburton 1 point per Piotroski's scoring. Spanning 20 years, the trend underscores inconsistent cash flow management, with notable fluctuations, particularly the steep drop to losses in 2003 and 2016. This year’s superior operating cash flow indicates a healthy liquidity and efficiency in converting net earnings to cash. This is a strong sign indicating operational cash sufficiency, vital for sustaining long-term financial health and investments.

Liquidity of Halliburton (HAL)

Leverage is declining?

Examining the change in leverage is crucial to understand the firm's financial risk and its reliance on debt financing. A decrease in leverage is generally seen as positive.

The leverage for Halliburton has decreased from 0.3749 in 2022 to 0.3463 in 2023, indicating a 7.6% decrease. Over the past 20 years, the leverage metrics reached their peak in 2016 at 0.4782 and have showed a general downward trend since. Given that the leverage has decreased in 2023, this trend is positive and adds 1 point based on Piotroski criteria. Lower leverage reduces the financial risk and possible distress costs for the company.

Current Ratio is growing?

The Current Ratio measures a company's ability to pay short-term obligations with its short-term assets.

Halliburton's Current Ratio increased slightly from 2.049 in 2022 to 2.0583 in 2023. This incremental change highlights a marginal improvement in the company's ability to meet its short-term obligations using its short-term assets. Taking into account the historical data, Halliburton's Current Ratio saw much higher values pre-2015, peaking in 2007 at 3.141. Although the increase in 2023 is positive, the ratio is still lower than its 2016 peak of 4.0323. Moreover, when compared to the industry median, Halliburton's Current Ratio is generally above the industry median, which was 1.821 in 2023. This advantage illustrates that Halliburton may be better positioned financially than its peers in terms of short-term liquidity. Hence, this is a positive indicator for investors, and as per the Piotroski Score, one point should be added.

Number of shares not diluted?

The Change in Shares Outstanding criterion examines if a company has reduced its number of shares. A decrease is often seen favorably as it could suggest share buybacks, serving shareholders' interests by increasing their ownership percentage and, potentially, share value.

Halliburton (HAL) saw a decrease in Outstanding Shares from 904 million in 2022 to 899 million in 2023, adding 1 point under the Piotroski criterion for this factor. This decrease signifies a share buyback approach, which can be a beneficial strategy for shareholders as it may enhance the value of remaining shares. Over the last 20 years, HAL's shares outstanding have seen fluctuations, reaching as high as 1.054 billion in 2006 and dropping significantly to 852 million in 2014, showing a pattern of active management of share capital.

Operating of Halliburton (HAL)

Cross Margin is growing?

Gross Margin measures the percentage of revenue that exceeds the cost of goods sold. It's crucial for evaluating a company's operational efficiency and pricing strategy.

Halliburton's Gross Margin increased from 0.1632 in 2022 to 0.1894 in 2023. This improvement reflects a growing efficiency in its operational processes or better pricing strategies. Interestingly, even though HAL's gross margin for 2023 (0.1894) remains below the industry median of 0.2368, the company's upward trend demonstrates resilience and progress. Over the past two decades, HAL has had fluctuations but recent improvements are promising. Hence, based on this trend, we'd assign a point according to the Piotroski criteria.

Asset Turnover Ratio is growing?

Asset turnover is a measure of a company's efficiency in generating sales from its assets. It reflects the company's ability to utilize its assets productively.

Comparing Halliburton's asset turnover ratio from 2022 (0.8907) to 2023 (0.9603), it is evident the asset turnover has increased. This increase from 0.8907 to 0.9603 signals a positive trend for the financial health of the company. Over the past 20 years, the asset turnover ratio has seen fluctuations, with notable highs in 2004 (1.3094) and lows in 2016 (0.4969). The recent improvement can be interpreted as Halliburton becoming more efficient in using its assets to generate revenue, thus earning 1 point in Piotroski Analysis.