• Twitter
Generic selectors
Exact matches only
Search in title
Search in content
Search in posts
Search in pages
  • Roger S. Conrad

Key Takeaways from Second-Quarter Earnings

By Elliott H. Gue on Aug. 1, 2016

After Halliburton (NYSE: HAL) and Schlumberger (NYSE: SLB) reported earnings in late July, the financial media published innumerable articles screaming that the oil-field services giants had called a bottom for the recent down-cycle.

The headlines contain a kernel of truth. Halliburton’s management team indicated that the second quarter would mark the trough for some of its core businesses in the North American onshore market—namely pressure pumping and other service and product line related to hydraulic fracturing.

Schlumberger’s management team was less sanguine about the prospects for the North American market, but indicated that the company should be able to claw back some pricing concessions and improve profitability by bundling service offerings and introducing higher-margin technologies.

We agree with Halliburton and Schlumberger’s assessment. However, calling the cycle’s bottom misses the point. At this juncture, investors should be more concerned about the likely speed and slope of the recovery after the trough.

Many oil-field service stocks—especially Helmerich & Payne (NYSE: HP) and other onshore contract drillers—have priced in a rapid rebound in profit margins and earnings. However, the recovery more than likely will prove to be W- or bathtub-shaped instead of V-shaped.

Energy & Income Advisor

Your complete guide to energy investing, from growth stocks to high-yielders.

In October 2012, renowned energy expert Elliott Gue launched the Energy & Income Advisor, a twice-monthly investment advisory that's dedicated to unearthing the most profitable opportunities in the sector, from growth stocks to high-yielding utilities, royalty trusts and master limited partnerships.

Subscribe today to receive a sample issue of EIA
  • Live Chat with

    Elliott and Roger on Oct. 29, 2020

  • Portfolios & Ratings

    • Model Portfolios

      Balanced portfolios of energy stocks for aggressive and conservative investors.

    • Producers and Drillers

      Our take on more than 50 energy-related equities, from upstream to downstream and everything in between.

    • MLPs and Midstream

      Our assessment of every energy-related master limited partnership.

    • International Coverage

      Roger Conrad’s coverage of more than 70 dividend-paying energy names.

    Experts

    • Elliott H. Gue

      Founder and Chief Analyst: Capitalist Times and Energy & Income Advisor

    • Roger S. Conrad

      Founder and Chief Analyst: Capitalist Times and Energy & Income Advisor