Intrinsic value of Halliburton - HAL

Previous Close

$45.20

  Intrinsic Value

$1.63

stock screener

  Rating & Target

str. sell

-96%

Previous close

$45.20

 
Intrinsic value

$1.63

 
Up/down potential

-96%

 
Rating

str. sell

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 2017), $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 39.3

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   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
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  29.80
  27.32
  25.09
  23.08
  21.27
  19.64
  18.18
  16.86
  15.68
  14.61
  13.65
  12.78
  12.00
  11.30
  10.67
  10.11
  9.60
  9.14
  8.72
  8.35
  8.02
  7.71
  7.44
  7.20
  6.98
  6.78
  6.60
  6.44
  6.30
  6.17
Revenue, $m
  26,765
  34,077
  42,626
  52,464
  63,624
  76,122
  89,961
  105,130
  121,609
  139,374
  158,395
  178,642
  200,086
  222,704
  246,474
  271,383
  297,423
  324,595
  352,908
  382,376
  413,024
  444,883
  477,992
  512,398
  548,154
  585,321
  623,966
  664,163
  705,991
  749,537
Variable operating expenses, $m
  38,113
  48,452
  60,540
  74,450
  90,229
  107,901
  127,468
  148,916
  172,218
  197,336
  223,961
  252,588
  282,910
  314,889
  348,499
  383,719
  420,538
  458,958
  498,990
  540,657
  583,991
  629,037
  675,852
  724,500
  775,057
  827,609
  882,250
  939,086
  998,229
  1,059,800
Fixed operating expenses, $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
Total operating expenses, $m
  38,113
  48,452
  60,540
  74,450
  90,229
  107,901
  127,468
  148,916
  172,218
  197,336
  223,961
  252,588
  282,910
  314,889
  348,499
  383,719
  420,538
  458,958
  498,990
  540,657
  583,991
  629,037
  675,852
  724,500
  775,057
  827,609
  882,250
  939,086
  998,229
  1,059,800
Operating income, $m
  -11,348
  -14,375
  -17,914
  -21,986
  -26,606
  -31,779
  -37,508
  -43,787
  -50,608
  -57,962
  -65,566
  -73,947
  -82,824
  -92,186
  -102,025
  -112,336
  -123,115
  -134,363
  -146,083
  -158,281
  -170,967
  -184,155
  -197,860
  -212,102
  -226,903
  -242,288
  -258,284
  -274,923
  -292,238
  -310,263
EBITDA, $m
  -9,642
  -12,276
  -15,356
  -18,900
  -22,920
  -27,422
  -32,407
  -37,872
  -43,809
  -50,208
  -57,060
  -64,354
  -72,079
  -80,227
  -88,790
  -97,763
  -107,144
  -116,932
  -127,131
  -137,747
  -148,788
  -160,265
  -172,192
  -184,586
  -197,467
  -210,856
  -224,777
  -239,258
  -254,326
  -270,013
Interest expense (income), $m
  659
  591
  860
  1,180
  1,555
  1,986
  2,475
  3,023
  3,629
  4,294
  5,016
  5,794
  6,628
  7,515
  8,454
  9,445
  10,487
  11,578
  12,719
  13,910
  15,151
  16,442
  17,785
  19,181
  20,632
  22,139
  23,706
  25,334
  27,028
  28,789
  30,622
Earnings before tax, $m
  -11,939
  -15,235
  -19,094
  -23,541
  -28,592
  -34,254
  -40,530
  -47,416
  -54,902
  -62,978
  -71,360
  -80,574
  -90,338
  -100,640
  -111,471
  -122,823
  -134,694
  -147,082
  -159,993
  -173,431
  -187,409
  -201,940
  -217,041
  -232,733
  -249,042
  -265,994
  -283,619
  -301,951
  -321,027
  -340,885
Tax expense, $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
Net income, $m
  -11,939
  -15,235
  -19,094
  -23,541
  -28,592
  -34,254
  -40,530
  -47,416
  -54,902
  -62,978
  -71,360
  -80,574
  -90,338
  -100,640
  -111,471
  -122,823
  -134,694
  -147,082
  -159,993
  -173,431
  -187,409
  -201,940
  -217,041
  -232,733
  -249,042
  -265,994
  -283,619
  -301,951
  -321,027
  -340,885

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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
Total assets, $m
  32,561
  41,456
  51,857
  63,825
  77,401
  92,606
  109,441
  127,895
  147,943
  169,555
  192,694
  217,325
  243,414
  270,929
  299,846
  330,149
  361,829
  394,885
  429,328
  465,178
  502,462
  541,220
  581,499
  623,355
  666,854
  712,069
  759,083
  807,984
  858,870
  911,846
Adjusted assets (=assets-cash), $m
  32,561
  41,456
  51,857
  63,825
  77,401
  92,606
  109,441
  127,895
  147,943
  169,555
  192,694
  217,325
  243,414
  270,929
  299,846
  330,149
  361,829
  394,885
  429,328
  465,178
  502,462
  541,220
  581,499
  623,355
  666,854
  712,069
  759,083
  807,984
  858,870
  911,846
Revenue / Adjusted assets
  0.822
  0.822
  0.822
  0.822
  0.822
  0.822
  0.822
  0.822
  0.822
  0.822
  0.822
  0.822
  0.822
  0.822
  0.822
  0.822
  0.822
  0.822
  0.822
  0.822
  0.822
  0.822
  0.822
  0.822
  0.822
  0.822
  0.822
  0.822
  0.822
  0.822
Average production assets, $m
  14,373
  18,299
  22,890
  28,173
  34,166
  40,877
  48,309
  56,455
  65,304
  74,844
  85,058
  95,931
  107,446
  119,592
  132,356
  145,732
  159,716
  174,308
  189,511
  205,336
  221,794
  238,902
  256,682
  275,158
  294,359
  314,317
  335,070
  356,655
  379,117
  402,501
Working capital, $m
  -214
  -273
  -341
  -420
  -509
  -609
  -720
  -841
  -973
  -1,115
  -1,267
  -1,429
  -1,601
  -1,782
  -1,972
  -2,171
  -2,379
  -2,597
  -2,823
  -3,059
  -3,304
  -3,559
  -3,824
  -4,099
  -4,385
  -4,683
  -4,992
  -5,313
  -5,648
  -5,996
Total debt, $m
  15,924
  21,857
  28,794
  36,777
  45,832
  55,974
  67,203
  79,512
  92,884
  107,299
  122,733
  139,162
  156,563
  174,916
  194,203
  214,415
  235,546
  257,594
  280,568
  304,479
  329,348
  355,200
  382,066
  409,984
  438,998
  469,156
  500,514
  533,131
  567,072
  602,407
Total liabilities, $m
  21,718
  27,651
  34,588
  42,571
  51,626
  61,768
  72,997
  85,306
  98,678
  113,093
  128,527
  144,956
  162,357
  180,710
  199,997
  220,209
  241,340
  263,388
  286,362
  310,273
  335,142
  360,994
  387,860
  415,778
  444,792
  474,950
  506,308
  538,925
  572,866
  608,201
Total equity, $m
  10,843
  13,805
  17,268
  21,254
  25,775
  30,838
  36,444
  42,589
  49,265
  56,462
  64,167
  72,369
  81,057
  90,219
  99,849
  109,940
  120,489
  131,497
  142,966
  154,904
  167,320
  180,226
  193,639
  207,577
  222,062
  237,119
  252,775
  269,059
  286,004
  303,645
Total liabilities and equity, $m
  32,561
  41,456
  51,856
  63,825
  77,401
  92,606
  109,441
  127,895
  147,943
  169,555
  192,694
  217,325
  243,414
  270,929
  299,846
  330,149
  361,829
  394,885
  429,328
  465,177
  502,462
  541,220
  581,499
  623,355
  666,854
  712,069
  759,083
  807,984
  858,870
  911,846
Debt-to-equity ratio
  1.470
  1.580
  1.670
  1.730
  1.780
  1.820
  1.840
  1.870
  1.890
  1.900
  1.910
  1.920
  1.930
  1.940
  1.940
  1.950
  1.950
  1.960
  1.960
  1.970
  1.970
  1.970
  1.970
  1.980
  1.980
  1.980
  1.980
  1.980
  1.980
  1.980
Adjusted equity ratio
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -11,939
  -15,235
  -19,094
  -23,541
  -28,592
  -34,254
  -40,530
  -47,416
  -54,902
  -62,978
  -71,360
  -80,574
  -90,338
  -100,640
  -111,471
  -122,823
  -134,694
  -147,082
  -159,993
  -173,431
  -187,409
  -201,940
  -217,041
  -232,733
  -249,042
  -265,994
  -283,619
  -301,951
  -321,027
  -340,885
Depreciation, amort., depletion, $m
  1,707
  2,099
  2,558
  3,087
  3,686
  4,357
  5,100
  5,915
  6,800
  7,754
  8,506
  9,593
  10,745
  11,959
  13,236
  14,573
  15,972
  17,431
  18,951
  20,534
  22,179
  23,890
  25,668
  27,516
  29,436
  31,432
  33,507
  35,666
  37,912
  40,250
Funds from operations, $m
  -10,233
  -13,136
  -16,536
  -20,454
  -24,906
  -29,897
  -35,430
  -41,501
  -48,102
  -55,224
  -62,854
  -70,981
  -79,594
  -88,681
  -98,235
  -108,250
  -118,722
  -129,652
  -141,042
  -152,898
  -165,230
  -178,049
  -191,373
  -205,218
  -219,606
  -234,562
  -250,112
  -266,286
  -283,115
  -300,635
Change in working capital, $m
  -49
  -58
  -68
  -79
  -89
  -100
  -111
  -121
  -132
  -142
  -152
  -162
  -172
  -181
  -190
  -199
  -208
  -217
  -226
  -236
  -245
  -255
  -265
  -275
  -286
  -297
  -309
  -322
  -335
  -348
Cash from operations, $m
  -10,183
  -13,077
  -16,468
  -20,376
  -24,816
  -29,797
  -35,319
  -41,380
  -47,970
  -55,082
  -62,702
  -70,819
  -79,422
  -88,500
  -98,045
  -108,051
  -118,514
  -129,434
  -140,815
  -152,662
  -164,984
  -177,794
  -191,108
  -204,942
  -219,320
  -234,264
  -249,803
  -265,964
  -282,780
  -300,287
Maintenance CAPEX, $m
  -1,108
  -1,437
  -1,830
  -2,289
  -2,817
  -3,417
  -4,088
  -4,831
  -5,645
  -6,530
  -7,484
  -8,506
  -9,593
  -10,745
  -11,959
  -13,236
  -14,573
  -15,972
  -17,431
  -18,951
  -20,534
  -22,179
  -23,890
  -25,668
  -27,516
  -29,436
  -31,432
  -33,507
  -35,666
  -37,912
New CAPEX, $m
  -3,293
  -3,927
  -4,591
  -5,283
  -5,993
  -6,712
  -7,431
  -8,146
  -8,850
  -9,540
  -10,214
  -10,873
  -11,516
  -12,146
  -12,765
  -13,376
  -13,984
  -14,592
  -15,204
  -15,824
  -16,458
  -17,108
  -17,780
  -18,476
  -19,201
  -19,959
  -20,752
  -21,586
  -22,462
  -23,384
Cash from investing activities, $m
  -4,401
  -5,364
  -6,421
  -7,572
  -8,810
  -10,129
  -11,519
  -12,977
  -14,495
  -16,070
  -17,698
  -19,379
  -21,109
  -22,891
  -24,724
  -26,612
  -28,557
  -30,564
  -32,635
  -34,775
  -36,992
  -39,287
  -41,670
  -44,144
  -46,717
  -49,395
  -52,184
  -55,093
  -58,128
  -61,296
Free cash flow, $m
  -14,584
  -18,441
  -22,888
  -27,948
  -33,627
  -39,925
  -46,838
  -54,356
  -62,465
  -71,152
  -80,401
  -90,198
  -100,531
  -111,390
  -122,769
  -134,662
  -147,071
  -159,997
  -173,450
  -187,438
  -201,976
  -217,082
  -232,778
  -249,087
  -266,037
  -283,659
  -301,987
  -321,057
  -340,908
  -361,583
Issuance/(repayment) of debt, $m
  4,982
  5,933
  6,937
  7,983
  9,055
  10,142
  11,229
  12,309
  13,372
  14,415
  15,434
  16,429
  17,401
  18,353
  19,288
  20,212
  21,130
  22,049
  22,974
  23,912
  24,869
  25,851
  26,866
  27,918
  29,014
  30,159
  31,358
  32,617
  33,941
  35,335
Issuance/(repurchase) of shares, $m
  14,433
  18,197
  22,558
  27,526
  33,113
  39,317
  46,136
  53,561
  61,578
  70,174
  79,066
  88,777
  99,026
  109,803
  121,100
  132,914
  145,243
  158,090
  171,462
  185,369
  199,825
  214,846
  230,454
  246,672
  263,527
  281,050
  299,274
  318,235
  337,972
  358,526
Cash from financing (excl. dividends), $m  
  19,415
  24,130
  29,495
  35,509
  42,168
  49,459
  57,365
  65,870
  74,950
  84,589
  94,500
  105,206
  116,427
  128,156
  140,388
  153,126
  166,373
  180,139
  194,436
  209,281
  224,694
  240,697
  257,320
  274,590
  292,541
  311,209
  330,632
  350,852
  371,913
  393,861
Total cash flow (excl. dividends), $m
  4,831
  5,689
  6,606
  7,561
  8,541
  9,534
  10,527
  11,513
  12,485
  13,437
  14,099
  15,008
  15,896
  16,765
  17,619
  18,464
  19,302
  20,141
  20,986
  21,843
  22,718
  23,615
  24,542
  25,503
  26,504
  27,550
  28,645
  29,796
  31,005
  32,278
Retained Cash Flow (-), $m
  -14,433
  -18,197
  -22,558
  -27,526
  -33,113
  -39,317
  -46,136
  -53,561
  -61,578
  -70,174
  -79,066
  -88,777
  -99,026
  -109,803
  -121,100
  -132,914
  -145,243
  -158,090
  -171,462
  -185,369
  -199,825
  -214,846
  -230,454
  -246,672
  -263,527
  -281,050
  -299,274
  -318,235
  -337,972
  -358,526
Prev. year cash balance distribution, $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 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
  -9,602
  -12,508
  -15,951
  -19,965
  -24,571
  -29,784
  -35,609
  -42,048
  -49,093
  -56,737
  -64,967
  -73,769
  -83,130
  -93,038
  -103,481
  -114,450
  -125,941
  -137,949
  -150,476
  -163,526
  -177,107
  -191,231
  -205,912
  -221,168
  -237,023
  -253,500
  -270,629
  -288,440
  -306,967
  -326,248
Discount rate, %
  6.10
  6.41
  6.73
  7.06
  7.41
  7.79
  8.17
  8.58
  9.01
  9.46
  9.94
  10.43
  10.95
  11.50
  12.08
  12.68
  13.32
  13.98
  14.68
  15.41
  16.19
  16.99
  17.84
  18.74
  19.67
  20.66
  21.69
  22.77
  23.91
  25.11
PV of cash for distribution, $m
  -9,050
  -11,047
  -13,122
  -15,196
  -17,183
  -18,994
  -20,544
  -21,759
  -22,581
  -22,971
  -22,916
  -22,422
  -21,521
  -20,262
  -18,710
  -16,942
  -15,040
  -13,083
  -11,147
  -9,298
  -7,587
  -6,052
  -4,716
  -3,587
  -2,660
  -1,921
  -1,351
  -923
  -612
  -394
Current shareholders' claim on cash, %
  73.2
  53.9
  40.0
  29.9
  22.5
  17.0
  12.9
  9.8
  7.5
  5.8
  4.4
  3.4
  2.7
  2.1
  1.6
  1.3
  1.0
  0.8
  0.6
  0.5
  0.4
  0.3
  0.2
  0.2
  0.1
  0.1
  0.1
  0.1
  0.1
  0.0

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 -6.8
Price to Sales 2.5
Price to Book 4.2
Price to Tangible Book
Price to Cash Flow -23
Price to Free Cash Flow -15.7
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 $20620 million for the last fiscal year's total revenue generated by Halliburton. The default revenue input number comes from 2017 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 29.8% 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 6.1%, 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 142.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 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 5.4% 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 53.7%.

Life of production assets of 10 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 -0.8%. 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 - $8349 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 870 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 $39.3 billion.

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COMPANY NEWS

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▶ Energy Earnings: Company Guidance Matters More Than Ever   [Jul-16-18 11:34AM  Barrons.com]
▶ Halliburton Declares Dividend   [Jul-12-18 05:10PM  Business Wire]
▶ The 5 Hottest Oil Stocks of 2018?   [Jul-11-18 07:30PM  Oilprice.com]
▶ Jim Cramer: Buy These Oil Servicers on New Exploration   [Jul-06-18 07:01PM  TheStreet.com]
▶ Interior watchdog reviews Zinke's ties to Halliburton boss   [Jun-28-18 03:34PM  Associated Press]
▶ 5 Energy Picks to Ride Surging Oil Prices   [06:00AM  Investopedia]
▶ Your Energy Investing Questions, Answered   [Jun-22-18 01:16PM  Motley Fool]
▶ Lawmakers seek investigation of Interior boss' land deal   [Jun-21-18 10:26PM  Associated Press]
▶ Halliburton Options Traders Bet Stock Will Rise 11%   [Jun-20-18 11:45AM  Investopedia]
▶ Former Halliburton campus in Houstons Westchase District sold   [10:41AM  American City Business Journals]
▶ Land deal ties Interior secretary's family, Halliburton boss   [Jun-19-18 04:01PM  Associated Press]
▶ Halliburton CEO: 'What we see today is a more disciplined environment'   [Jun-18-18 02:02PM  American City Business Journals]
▶ 2 Best Oil Trades Ahead of Key OPEC Meeting   [09:27AM  TheStreet.com]
▶ Halliburton and Gap tumble while Foot Locker and Quest climb   [May-25-18 04:36PM  Associated Press]
▶ Halliburton 2018 Second Quarter Conference Call   [May-24-18 05:15PM  Business Wire]
▶ Top 3 Equipment and Services ETFs   [09:55AM  Investopedia]
▶ Final Trade: HAL, AMD & more   [May-23-18 05:30PM  CNBC Videos]
▶ Halliburton shareholders vote against executive compensation plan   [09:18AM  American City Business Journals]
▶ 10 Small-Cap Oil & Gas Stocks to Watch   [May-17-18 03:27PM  InvestorPlace]
▶ Are Halliburton Companys (NYSE:HAL) Interest Costs Too High?   [May-09-18 07:23PM  Simply Wall St.]
▶ Your first trade for Tuesday, May 8   [May-08-18 08:33AM  CNBC]
▶ Final Trade: AMGN, GLD & more   [May-07-18 05:30PM  CNBC Videos]
▶ 3 Oil Stocks Ready to Rally   [06:00AM  Investopedia]
▶ Houston oil field services giants all have seasonal revenue decline   [Apr-25-18 09:22AM  American City Business Journals]
▶ Oil Prices Tumble After Brent Breaks $75   [04:00PM  Oilprice.com]
▶ [$$] The Next Winners From the Oil Rally   [Apr-23-18 11:54PM  The Wall Street Journal]
▶ Halliburton Sees This Key Fracking Bottleneck Clearing Up Soon   [04:06PM  Investor's Business Daily]
▶ [$$] The Next Winners From the Oil Rally   [12:25PM  The Wall Street Journal]
▶ Halliburton revenue gushes higher   [10:33AM  Reuters Videos]
▶ Q1 Earnings Deluge   [10:33AM  Zacks]
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