Analyzing Halliburton Company (HAL) & Schlumberger N.V. (SLB)

Halliburton Company (NYSE: HAL) and Schlumberger N.V. (NYSE:SLB) are both large-cap oils/energy companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitabiliy, dividends, institutional ownership, earnings, analyst recommendations, risk and valuation.

Earnings and Valuation

This table compares Halliburton Company and Schlumberger N.V.’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Halliburton Company $15.97 billion 2.44 $2.17 billion ($3.93) -11.43
Schlumberger N.V. $28.18 billion 3.42 $6.20 billion ($1.38) -50.22

Schlumberger N.V. has higher revenue and earnings than Halliburton Company. Schlumberger N.V. is trading at a lower price-to-earnings ratio than Halliburton Company, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Halliburton Company and Schlumberger N.V., as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Halliburton Company 2 2 28 0 2.81
Schlumberger N.V. 0 4 21 1 2.88

Halliburton Company presently has a consensus target price of $60.82, indicating a potential upside of 35.40%. Schlumberger N.V. has a consensus target price of $93.00, indicating a potential upside of 34.18%. Given Halliburton Company’s higher possible upside, analysts plainly believe Halliburton Company is more favorable than Schlumberger N.V..

Profitability

This table compares Halliburton Company and Schlumberger N.V.’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Halliburton Company -21.19% -0.48% -0.17%
Schlumberger N.V. -6.77% 3.32% 1.77%

Risk and Volatility

Halliburton Company has a beta of 0.98, meaning that its stock price is 2% less volatile than the S&P 500. Comparatively, Schlumberger N.V. has a beta of 1, meaning that its stock price has a similar volatility profile to the S&P 500.

Insider and Institutional Ownership

79.4% of Halliburton Company shares are owned by institutional investors. Comparatively, 79.4% of Schlumberger N.V. shares are owned by institutional investors. 0.5% of Halliburton Company shares are owned by insiders. Comparatively, 0.4% of Schlumberger N.V. shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Dividends

Halliburton Company pays an annual dividend of $0.72 per share and has a dividend yield of 1.6%. Schlumberger N.V. pays an annual dividend of $2.00 per share and has a dividend yield of 2.9%. Halliburton Company pays out -18.3% of its earnings in the form of a dividend. Schlumberger N.V. pays out -144.9% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Schlumberger N.V. has raised its dividend for 6 consecutive years. Schlumberger N.V. is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Schlumberger N.V. beats Halliburton Company on 13 of the 17 factors compared between the two stocks.

About Halliburton Company

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.

About Schlumberger N.V.

Schlumberger N.V. provides technology for reservoir characterization, drilling, production and processing to the oil and gas industry. The Company’s segments include Reservoir Characterization Group, Drilling Group, Production Group and Cameron Group. The Reservoir Characterization Group consists of the principal technologies involved in finding and defining hydrocarbon resources. The Drilling Group consists of the principal technologies involved in the drilling and positioning of oil and gas wells. The Production Group consists of the principal technologies involved in the lifetime production of oil and gas reservoirs and includes Well Services, Completions, Artificial Lift, Integrated Production Services (IPS) and Schlumberger Production Management (SPM). The Cameron Group consists of the principal technologies involved in pressure and flow control for drilling and intervention rigs, oil and gas wells and production facilities.

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