Intrinsic value of Halliburton - HAL

Previous Close

$41.77

  Intrinsic Value

$117.70

stock screener

  Rating & Target

str. buy

+182%

Previous close

$41.77

 
Intrinsic value

$117.70

 
Up/down potential

+182%

 
Rating

str. buy

We calculate the intrinsic value of HAL stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 36.4

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -32.78
  29.30
  26.87
  24.68
  22.71
  20.94
  19.35
  17.91
  16.62
  15.46
  14.41
  13.47
  12.63
  11.86
  11.18
  10.56
  10.00
  9.50
  9.05
  8.65
  8.28
  7.95
  7.66
  7.39
  7.15
  6.94
  6.74
  6.57
  6.41
  6.27
  6.14
Revenue, $m
  15,887
  20,542
  26,061
  32,494
  39,875
  48,226
  57,558
  67,869
  79,150
  91,387
  104,560
  118,647
  133,627
  149,479
  166,186
  183,734
  202,113
  221,319
  241,354
  262,225
  283,944
  306,530
  330,006
  354,404
  379,757
  406,106
  433,495
  461,976
  491,603
  522,435
  554,536
Variable operating expenses, $m
 
  4,058
  5,084
  6,279
  7,650
  9,202
  10,936
  12,852
  14,948
  17,222
  19,669
  22,045
  24,829
  27,774
  30,878
  34,139
  37,554
  41,122
  44,845
  48,723
  52,758
  56,955
  61,317
  65,850
  70,561
  75,457
  80,546
  85,838
  91,342
  97,071
  103,036
Fixed operating expenses, $m
 
  20,002
  20,502
  21,014
  21,540
  22,078
  22,630
  23,196
  23,776
  24,370
  24,980
  25,604
  26,244
  26,900
  27,573
  28,262
  28,969
  29,693
  30,435
  31,196
  31,976
  32,775
  33,595
  34,435
  35,295
  36,178
  37,082
  38,009
  38,960
  39,934
  40,932
Total operating expenses, $m
  22,665
  24,060
  25,586
  27,293
  29,190
  31,280
  33,566
  36,048
  38,724
  41,592
  44,649
  47,649
  51,073
  54,674
  58,451
  62,401
  66,523
  70,815
  75,280
  79,919
  84,734
  89,730
  94,912
  100,285
  105,856
  111,635
  117,628
  123,847
  130,302
  137,005
  143,968
Operating income, $m
  -6,778
  -3,518
  476
  5,201
  10,685
  16,946
  23,991
  31,821
  40,426
  49,795
  59,911
  70,998
  82,554
  94,805
  107,735
  121,333
  135,591
  150,504
  166,074
  182,306
  199,210
  216,800
  235,095
  254,119
  273,901
  294,471
  315,867
  338,129
  361,301
  385,430
  410,569
EBITDA, $m
  -5,275
  -1,706
  2,710
  7,927
  13,976
  20,875
  28,634
  37,252
  46,720
  57,025
  68,148
  80,071
  92,773
  106,236
  120,443
  135,383
  151,046
  167,429
  184,531
  202,359
  220,923
  240,240
  260,331
  281,221
  302,941
  325,526
  349,017
  373,457
  398,894
  425,381
  452,974
Interest expense (income), $m
  659
  586
  831
  1,122
  1,461
  1,849
  2,289
  2,780
  3,323
  3,917
  4,562
  5,255
  5,997
  6,786
  7,620
  8,500
  9,424
  10,392
  11,403
  12,458
  13,557
  14,701
  15,890
  17,126
  18,411
  19,745
  21,133
  22,575
  24,075
  25,635
  27,258
Earnings before tax, $m
  -7,625
  -4,104
  -356
  4,079
  9,224
  15,097
  21,702
  29,040
  37,103
  45,878
  55,349
  65,742
  76,557
  88,019
  100,115
  112,833
  126,167
  140,112
  154,671
  169,848
  185,653
  202,099
  219,205
  236,993
  255,490
  274,726
  294,734
  315,554
  337,226
  359,796
  383,310
Tax expense, $m
  -1,858
  0
  0
  1,101
  2,491
  4,076
  5,860
  7,841
  10,018
  12,387
  14,944
  17,750
  20,670
  23,765
  27,031
  30,465
  34,065
  37,830
  41,761
  45,859
  50,126
  54,567
  59,185
  63,988
  68,982
  74,176
  79,578
  85,200
  91,051
  97,145
  103,494
Net income, $m
  -5,763
  -4,104
  -356
  2,978
  6,734
  11,021
  15,843
  21,200
  27,085
  33,491
  40,405
  47,992
  55,887
  64,254
  73,084
  82,368
  92,102
  102,282
  112,910
  123,989
  135,527
  147,532
  160,020
  173,005
  186,508
  200,550
  215,156
  230,355
  246,175
  262,651
  279,817

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  4,009
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  27,000
  29,728
  37,716
  47,025
  57,707
  69,792
  83,296
  98,218
  114,544
  132,253
  151,317
  171,703
  193,382
  216,323
  240,501
  265,895
  292,493
  320,288
  349,283
  379,486
  410,917
  443,603
  477,578
  512,885
  549,576
  587,707
  627,345
  668,562
  711,437
  756,056
  802,513
Adjusted assets (=assets-cash), $m
  22,991
  29,728
  37,716
  47,025
  57,707
  69,792
  83,296
  98,218
  114,544
  132,253
  151,317
  171,703
  193,382
  216,323
  240,501
  265,895
  292,493
  320,288
  349,283
  379,486
  410,917
  443,603
  477,578
  512,885
  549,576
  587,707
  627,345
  668,562
  711,437
  756,056
  802,513
Revenue / Adjusted assets
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
Average production assets, $m
  10,325
  13,352
  16,940
  21,121
  25,919
  31,347
  37,412
  44,115
  51,448
  59,402
  67,964
  77,121
  86,857
  97,161
  108,021
  119,427
  131,373
  143,858
  156,880
  170,446
  184,564
  199,244
  214,504
  230,362
  246,842
  263,969
  281,772
  300,284
  319,542
  339,583
  360,449
Working capital, $m
  7,654
  4,930
  6,255
  7,799
  9,570
  11,574
  13,814
  16,288
  18,996
  21,933
  25,094
  28,475
  32,070
  35,875
  39,885
  44,096
  48,507
  53,117
  57,925
  62,934
  68,147
  73,567
  79,202
  85,057
  91,142
  97,465
  104,039
  110,874
  117,985
  125,384
  133,089
Total debt, $m
  12,377
  17,320
  23,374
  30,431
  38,528
  47,688
  57,925
  69,235
  81,611
  95,034
  109,484
  124,937
  141,369
  158,759
  177,086
  196,335
  216,496
  237,565
  259,542
  282,437
  306,261
  331,037
  356,790
  383,553
  411,364
  440,268
  470,313
  501,556
  534,055
  567,877
  603,091
Total liabilities, $m
  17,591
  22,534
  28,588
  35,645
  43,742
  52,902
  63,139
  74,449
  86,825
  100,248
  114,698
  130,151
  146,583
  163,973
  182,300
  201,549
  221,710
  242,779
  264,756
  287,651
  311,475
  336,251
  362,004
  388,767
  416,578
  445,482
  475,527
  506,770
  539,269
  573,091
  608,305
Total equity, $m
  9,409
  7,194
  9,127
  11,380
  13,965
  16,890
  20,158
  23,769
  27,720
  32,005
  36,619
  41,552
  46,798
  52,350
  58,201
  64,347
  70,783
  77,510
  84,526
  91,836
  99,442
  107,352
  115,574
  124,118
  132,997
  142,225
  151,817
  161,792
  172,168
  182,966
  194,208
Total liabilities and equity, $m
  27,000
  29,728
  37,715
  47,025
  57,707
  69,792
  83,297
  98,218
  114,545
  132,253
  151,317
  171,703
  193,381
  216,323
  240,501
  265,896
  292,493
  320,289
  349,282
  379,487
  410,917
  443,603
  477,578
  512,885
  549,575
  587,707
  627,344
  668,562
  711,437
  756,057
  802,513
Debt-to-equity ratio
  1.315
  2.410
  2.560
  2.670
  2.760
  2.820
  2.870
  2.910
  2.940
  2.970
  2.990
  3.010
  3.020
  3.030
  3.040
  3.050
  3.060
  3.060
  3.070
  3.080
  3.080
  3.080
  3.090
  3.090
  3.090
  3.100
  3.100
  3.100
  3.100
  3.100
  3.110
Adjusted equity ratio
  0.235
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -5,763
  -4,104
  -356
  2,978
  6,734
  11,021
  15,843
  21,200
  27,085
  33,491
  40,405
  47,992
  55,887
  64,254
  73,084
  82,368
  92,102
  102,282
  112,910
  123,989
  135,527
  147,532
  160,020
  173,005
  186,508
  200,550
  215,156
  230,355
  246,175
  262,651
  279,817
Depreciation, amort., depletion, $m
  1,503
  1,812
  2,234
  2,726
  3,291
  3,929
  4,643
  5,431
  6,294
  7,230
  8,237
  9,073
  10,219
  11,431
  12,708
  14,050
  15,456
  16,924
  18,457
  20,052
  21,713
  23,441
  25,236
  27,101
  29,040
  31,055
  33,150
  35,328
  37,593
  39,951
  42,406
Funds from operations, $m
  -690
  -2,292
  1,879
  5,704
  10,024
  14,950
  20,486
  26,631
  33,379
  40,721
  48,642
  57,065
  66,105
  75,685
  85,792
  96,418
  107,557
  119,206
  131,366
  144,042
  157,240
  170,973
  185,255
  200,107
  215,548
  231,605
  248,306
  265,682
  283,768
  302,602
  322,222
Change in working capital, $m
  1,013
  1,117
  1,325
  1,544
  1,771
  2,004
  2,240
  2,475
  2,708
  2,937
  3,161
  3,381
  3,595
  3,805
  4,010
  4,211
  4,411
  4,610
  4,808
  5,009
  5,213
  5,421
  5,634
  5,855
  6,085
  6,324
  6,574
  6,835
  7,110
  7,400
  7,704
Cash from operations, $m
  -1,703
  -3,409
  554
  4,160
  8,253
  12,946
  18,246
  24,156
  30,672
  37,784
  45,481
  53,684
  62,510
  71,880
  81,782
  92,207
  103,146
  114,597
  126,558
  139,033
  152,027
  165,552
  179,621
  194,251
  209,463
  225,281
  241,732
  258,847
  276,658
  295,202
  314,518
Maintenance CAPEX, $m
  0
  -1,215
  -1,571
  -1,993
  -2,485
  -3,049
  -3,688
  -4,401
  -5,190
  -6,053
  -6,988
  -7,996
  -9,073
  -10,219
  -11,431
  -12,708
  -14,050
  -15,456
  -16,924
  -18,457
  -20,052
  -21,713
  -23,441
  -25,236
  -27,101
  -29,040
  -31,055
  -33,150
  -35,328
  -37,593
  -39,951
New CAPEX, $m
  -798
  -3,028
  -3,588
  -4,181
  -4,798
  -5,428
  -6,065
  -6,702
  -7,333
  -7,954
  -8,562
  -9,157
  -9,737
  -10,304
  -10,859
  -11,406
  -11,946
  -12,484
  -13,023
  -13,566
  -14,117
  -14,681
  -15,260
  -15,858
  -16,479
  -17,127
  -17,803
  -18,513
  -19,257
  -20,041
  -20,866
Cash from investing activities, $m
  -710
  -4,243
  -5,159
  -6,174
  -7,283
  -8,477
  -9,753
  -11,103
  -12,523
  -14,007
  -15,550
  -17,153
  -18,810
  -20,523
  -22,290
  -24,114
  -25,996
  -27,940
  -29,947
  -32,023
  -34,169
  -36,394
  -38,701
  -41,094
  -43,580
  -46,167
  -48,858
  -51,663
  -54,585
  -57,634
  -60,817
Free cash flow, $m
  -2,413
  -7,652
  -4,604
  -2,014
  971
  4,468
  8,493
  13,053
  18,149
  23,777
  29,930
  36,532
  43,700
  51,358
  59,492
  68,092
  77,150
  86,657
  96,611
  107,010
  117,857
  129,158
  140,921
  153,157
  165,882
  179,114
  192,874
  207,185
  222,073
  237,568
  253,701
Issuance/(repayment) of debt, $m
  -3,097
  5,106
  6,055
  7,056
  8,097
  9,161
  10,236
  11,311
  12,375
  13,423
  14,450
  15,453
  16,432
  17,389
  18,327
  19,249
  20,161
  21,069
  21,978
  22,894
  23,825
  24,776
  25,753
  26,763
  27,811
  28,904
  30,045
  31,242
  32,499
  33,822
  35,214
Issuance/(repurchase) of shares, $m
  186
  5,736
  2,289
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -2,920
  10,842
  8,344
  7,056
  8,097
  9,161
  10,236
  11,311
  12,375
  13,423
  14,450
  15,453
  16,432
  17,389
  18,327
  19,249
  20,161
  21,069
  21,978
  22,894
  23,825
  24,776
  25,753
  26,763
  27,811
  28,904
  30,045
  31,242
  32,499
  33,822
  35,214
Total cash flow (excl. dividends), $m
  -5,448
  3,189
  3,739
  5,042
  9,067
  13,629
  18,729
  24,363
  30,524
  37,200
  44,380
  51,985
  60,133
  68,747
  77,819
  87,342
  97,311
  107,726
  118,589
  129,905
  141,682
  153,934
  166,674
  179,920
  193,694
  208,018
  222,919
  238,427
  254,572
  271,389
  288,915
Retained Cash Flow (-), $m
  6,053
  -5,736
  -2,289
  -2,253
  -2,585
  -2,925
  -3,268
  -3,611
  -3,951
  -4,286
  -4,613
  -4,934
  -5,246
  -5,552
  -5,851
  -6,145
  -6,437
  -6,726
  -7,017
  -7,309
  -7,606
  -7,910
  -8,222
  -8,544
  -8,879
  -9,228
  -9,592
  -9,974
  -10,376
  -10,798
  -11,242
Prev. year cash balance distribution, $m
 
  3,846
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  1,300
  1,450
  2,789
  6,482
  10,704
  15,461
  20,752
  26,573
  32,915
  39,767
  47,051
  54,886
  63,195
  71,968
  81,196
  90,874
  100,999
  111,572
  122,595
  134,076
  146,024
  158,452
  171,376
  184,814
  198,790
  213,327
  228,452
  244,196
  260,592
  277,673
Discount rate, %
 
  8.70
  9.14
  9.59
  10.07
  10.57
  11.10
  11.66
  12.24
  12.85
  13.50
  14.17
  14.88
  15.62
  16.41
  17.23
  18.09
  18.99
  19.94
  20.94
  21.98
  23.08
  24.24
  25.45
  26.72
  28.06
  29.46
  30.93
  32.48
  34.11
  35.81
PV of cash for distribution, $m
 
  1,196
  1,218
  2,119
  4,416
  6,475
  8,220
  9,590
  10,549
  11,085
  11,212
  10,951
  10,388
  9,573
  8,581
  7,485
  6,357
  5,255
  4,228
  3,310
  2,519
  1,863
  1,338
  931
  628
  410
  259
  158
  93
  52
  29
Current shareholders' claim on cash, %
  100
  79.0
  73.0
  73.0
  73.0
  73.0
  73.0
  73.0
  73.0
  73.0
  73.0
  73.0
  73.0
  73.0
  73.0
  73.0
  73.0
  73.0
  73.0
  73.0
  73.0
  73.0
  73.0
  73.0
  73.0
  73.0
  73.0
  73.0
  73.0
  73.0
  73.0

Halliburton Company provides services and products to the upstream oil and natural gas industry throughout the lifecycle of the reservoir, from locating hydrocarbons and managing geological data, to drilling and formation evaluation, well construction and completion, and optimizing production throughout the life of the field. It operates through two segments: the Completion and Production segment, and the Drilling and Evaluation segment. The Completion and Production segment delivers cementing, stimulation, intervention, pressure control, specialty chemicals, artificial lift and completion services. The Drilling and Evaluation segment provides field and reservoir modeling, drilling, evaluation and wellbore placement solutions that enable customers to model, measure, drill and optimize their well construction activities. It serves national and independent oil and natural gas companies. As of December 31, 2016, it had conducted business in approximately 70 countries around the world.

FINANCIAL RATIOS  of  Halliburton (HAL)

Valuation Ratios
P/E Ratio -6.3
Price to Sales 2.3
Price to Book 3.8
Price to Tangible Book
Price to Cash Flow -21.2
Price to Free Cash Flow -14.5
Growth Rates
Sales Growth Rate -32.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -63.5%
Cap. Spend. - 3 Yr. Gr. Rate -22.9%
Financial Strength
Quick Ratio 25
Current Ratio 0.2
LT Debt to Equity 129.8%
Total Debt to Equity 131.5%
Interest Coverage -11
Management Effectiveness
Return On Assets -16.5%
Ret/ On Assets - 3 Yr. Avg. -1.8%
Return On Total Capital -21.9%
Ret/ On T. Cap. - 3 Yr. Avg. -3%
Return On Equity -46.3%
Return On Equity - 3 Yr. Avg. -9%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 5.4%
Gross Margin - 3 Yr. Avg. 10.7%
EBITDA Margin -34.4%
EBITDA Margin - 3 Yr. Avg. -2.3%
Operating Margin -42.7%
Oper. Margin - 3 Yr. Avg. -9.3%
Pre-Tax Margin -48%
Pre-Tax Margin - 3 Yr. Avg. -12.5%
Net Profit Margin -36.3%
Net Profit Margin - 3 Yr. Avg. -9.5%
Effective Tax Rate 24.4%
Eff/ Tax Rate - 3 Yr. Avg. 26.9%
Payout Ratio -10.8%

HAL stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the HAL stock intrinsic value calculation we used $15887 million for the last fiscal year's total revenue generated by Halliburton. The default revenue input number comes from 2016 income statement of Halliburton. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our HAL stock valuation model: a) initial revenue growth rate of 29.3% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 8.7%, whose default value for HAL is calculated based on our internal credit rating of Halliburton, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Halliburton.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of HAL stock the variable cost ratio is equal to 20.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $19514 million in the base year in the intrinsic value calculation for HAL stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 4.8% for Halliburton.

Corporate tax rate of 27% is the nominal tax rate for Halliburton. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the HAL stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for HAL are equal to 65%.

Life of production assets of 8.5 years is the average useful life of capital assets used in Halliburton operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for HAL is equal to 24%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $9409 million for Halliburton - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 871.682 million for Halliburton is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Halliburton at the current share price and the inputted number of shares is $36.4 billion.

RELATED COMPANIES Price Int.Val. Rating
SLB Schlumberger 61.96 91.05  buy
SPN Superior Energ 8.95 0.82  str.sell
PES Pioneer Energy 2.00 0.90  str.sell
NOV National Oilwe 32.02 5.18  str.sell
TTI Tetra Technolo 3.71 0.49  str.sell
RES RPC 23.30 0.89  str.sell

COMPANY NEWS

▶ Should You Buy Oil Stocks in 2018?   [Nov-14-17 08:09PM  Zacks]
▶ Why Energy Stocks Are Suddenly Hot   [06:00AM  Investopedia]
▶ ETFs with exposure to Halliburton Co. : November 10, 2017   [Nov-10-17 12:32PM  Capital Cube]
▶ A Look at OFS Giants Relative Valuations   [09:03AM  Market Realist]
▶ SLB, HAL, BHGE, and NOV: How Do Debt Positions Stack Up?   [Nov-09-17 05:19PM  Market Realist]
▶ Is Halliburtons Revenue Rising Faster than Others?   [Nov-08-17 05:20PM  Market Realist]
▶ Halliburton is hiring more in Four Corners region   [Nov-07-17 07:20PM  American City Business Journals]
▶ Oil companies are hiring more in New Mexico's Four Corners region   [04:20PM  American City Business Journals]
▶ Oil Rally Halts As Saudi Purge Continues   [03:00PM  Oilprice.com]
▶ Halliburton Declares Dividend   [Nov-03-17 05:15PM  Business Wire]
▶ Gauging National Oilwells Returns after 3Q17   [Oct-27-17 05:26PM  Market Realist]
▶ Why Nabors Industries 3Q17 Earnings Missed Estimates   [Oct-25-17 02:58PM  Market Realist]
▶ Will Halliburtons Returns Improve after 3Q17?   [02:23PM  Market Realist]
▶ Halliburtons Earnings Drivers in 3Q17   [02:23PM  Market Realist]
▶ Why Halliburtons 3Q17 Earnings Beat Estimates   [02:22PM  Market Realist]
▶ Halliburton Beats As North America Revenue Nearly Doubles   [Oct-23-17 04:02PM  Investor's Business Daily]
▶ Elections In Japan   [10:40AM  Zacks]
▶ Halliburton's profit spurts higher   [10:24AM  Reuters Videos]
▶ Halliburton tops Street 3Q forecasts   [07:02AM  Associated Press]
▶ Schlumberger: Oil Patch Now Focused On Cash Flow Vs. Output Growth   [Oct-20-17 04:06PM  Investor's Business Daily]
▶ Schlumberger Helps Out Halliburton   [10:01AM  Bloomberg]
Financial statements of HAL
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

FREE DOWNLOAD
Follow us on:   twitter   twitter   twitter   twitter

VALUATION THEORY       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2017. All rigths reserved.