I admit I’m no economic genius but how can a company announce their forecasted 1st quarter earnings would miss the target by 70% before the bell rings and see their stock price jump – PB/TK
Halliburton’s So-Bad-It’s-Good Friday – By Liam Denning March 24 2017
It takes a lot to turn a profit warning into a party. But Halliburton Co. somehow started the weekend celebration early with what should have been a downer.
There was trepidation heading into Friday morning’s hastily scheduled update call with the oilfield services giant, especially with oil prices sliding this month. And Halliburton did deliver a profit warning. It just happened to be one of the more ebullient profit warnings I can remember: The stock actually jumped by almost 2 percent soon after the market opened (and just as the call was ending).
Even as of writing this the stock was down only barely, despite Halliburton’s new guidance implying that first-quarter earnings per share would be at least 70 percent lower than the current consensus forecast.
It helps that the first quarter’s earnings only account for about 11 percent of the full-year forecast of $1.19 a share, according to data compiled by Bloomberg. Assuming first-quarter earnings come in at 3 cents rather than the 13.6 cents analysts had expected, Halliburton can make that up by beating expectations for the rest of the year by 10 percent.
Most of the call consisted of explaining why Halliburton thinks it can make that up — and then some.
The hit to earnings isn’t because customers aren’t showing up — far from it. The number of rigs operating onshore in the U.S. has jumped by more than a fifth so far this year and is now almost double what it was at the end of last June.
Halliburton had already expected it would bring a lot of its pressure pumping equipment — used for fracking — out of storage and back to work this year. But if demand from its E&P clients remains as strong as it is now, the company says it will reactivate double that original amount of equipment in the first half alone. To keep up, it has been refitting old fracking sets with new pumps — thereby deploying them at half the cost of newly built sets, it says. It is even hiring again after deep cuts.
Continue to Bloomberg.com article: https://www.bloomberg.com/gadfly/articles/2017-03-24/halliburton-profit-warning-turns-into-a-party
