VintonCounty

Halliburton at a Discount - Despite Continuously Meeting Expectations

P/E is 12.5 for HAL and 19 for SLB. Tax may explain the difference. The effective income tax rates are 25% for HAL and 20% for SLB. The difference is likely due to domicile; HAL is incorporated in the U.S. (Delaware), and SLB is incorporated in Netherlands Antilles. U.S. tax rate of about 40% (35% fed. + state taxes) is the world's highest. For HAL to have 25% effective tax rate, it must divide itself into domestic Halliburton and foreign Halliburton; and the foreign funds must not come to the U.S. That restricts management's freedom of action. So the shadow of the IRS may be the reason for the lower P/E for HAL.

Opportunities in Natural Gas: Baker Hughes, Halliburton, Schlumberger

Return on capital must not be defined in GAAP, because many definitions of both the numerator and denominator are used. This data on returns on capital are of little use, because it's undefined.

Earnings yield is the inverse of P/E, but not here. So what is it?

SLB has the advantage of a low income tax rate and the disadvantage of a small earnings yield.