Will Halliburton’s Stock Outperform Against Industry Headwinds?

Halliburton Company (NYSE:HAL) is one of the largest oil and gas equipment and services companies on the planet with operations in over 70 countries. With shares trading around $33.08, is HAL an OUTPERFORM, a WAIT AND SEE, or a STAY AWAY?

Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

E = Equity to Debt Ratio is NormalHalliburton

Halliburton falls right in the middle of its industry when compared against competitors Baker Hughes Incorporated (NYSE:BHI) and Schlumberger Limited (NYSE:SLB). The debt-to-equity ratios of these three companies fall right next to each other.

Halliburton clocks in at 0.32, losing to industry runt Baker Hughes, which has a ratio of 0.30, and just beating Schlumberger at 0.33.

The debt position of the companies is more differentiated when looking at total cash and total debt. Halliburton is sitting on total cash of $2.76 billion and total debt of $4.82 billion. The smaller Baker Hughes has just $1.01 billion in debt but a larger total debt load of $5.14 billion. Schlumberger has total cash of $4.76 billion and debt of $11.19 billion.

T = Technicals on the Stock Chart are Weak

As of December 2, the company’s stock price was 5.70 percent above its 20-day simple moving average, or SMA; 0.59 percent below its 50-day SMA; and 2.19 percent below its 200-day SMA.

Since the beginning of 2012, the stock has generally trended downward, losing 2.34 percent of its value this year to date, and 8.83 percent year over year. For comparison, shares of Baker Hughes have come down 15.43 percent this YTD while shares of Schlumberger have edged up 2.18 percent.

As a benchmark, the S&P 500 Index has gained 10.89 percent this YTD, and 13.82 percent Y/Y.

E = Excellent Performance Relative to Peers

Many investors favor return on equity as a key metric to diagnose how well a company is performing. While Halliburton comes in second place in its debt position and stock-chart technicals, it is the clear ROE winner.

Halliburton claims a whopping ROE of 21.03 percent compared to Baker Hughes at 8.54 percent and Schlumberger at 16.71 percent.

Operating margins are also a key metric for stock evaluation, providing insight into how efficiently a company can translate sales into profit. On this metric Halliburton once again falls to second place with an operating margin of 16.3 percent, beating out Baker Hughes at 10.59 percent but losing to Schlumberger at 17.26 percent.