Prepared by Stephanie, analyst at the team of BAD BEAT Investing
Halliburton (NYSE:HAL) stock has been under pressure along with the energy sector as a whole within the last few weeks. We are seeing massive costs for the company in the short term. Despite trying to slash expenses, it is tough to keep going after a quarter (the March to June quarter) that saw unprecedented oil price action. We believe oil demand will pick up this winter into 2021, and that should help pricing. When economies around the world even return to 50% of what they were doing before the COVID-19 crisis, pent-up demand for oil will be unleashed, in our opinion. We think you can start buying now as a contrarian play, ahead of what we see as a rebound that is coming this winter. Unless you see bankruptcy as likely, despite another few weeks to months of pain in oil, you can buy. In this column, we check back in on performance as we prepare for Q3 results. We think you should be watching these metrics when Q3 is reported.
Performance was mostly better than we expected in Q2, but Q3 likely to see pain
When the company reported its Q2 earnings, it saw a slight top line miss and a bottom line beat versus consensus estimates. We think Q3 will be pressured, but it will be a sequential improvement from Q2. To be clear, Q2 was a really tough quarter, and we thought sales revenues could have been down 50% here. We see Q3 sales being down 20-30%. You need to understand that oil prices are so strongly linked to the performance of the company and the stock. As such, with wild moves in oil prices in recent weeks, the stock has moved with volatility. The uncertainty makes decisions like capex and labor planning all that much
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