When I’m looking for a stock to be my “Bear of the Day” I look for weak stocks in a weak industry. So you see it’s easy for me to look at a Zacks Rank #5 (Strong Sell) in an industry that ranks in the bottom 18% of the 265 industries we rank with our Zacks Industry Rank, and find myself a bearish idea. But when that stock also happens to be in the energy business that’s taken the biggest hit this year, I almost feel like I’m making it too obvious.
Falling crude prices have put pressure on companies across the energy sector. Today’s “Bear of the Day” Halliburton (HAL – Analyst Report) is one of the world’s largest providers of products and services to the energy industry. The company serves the upstream oil and gas industry throughout the lifecycle of the reservoir. It’s no wonder that business would be struggling as oil is becoming cheaper and cheaper as more is brought to market.
You don’t have to take my word for it. Recently, ten analysts have revised their earnings estimates to the downside for the current year, while eleven have done so for next year. Most of that bearish change took place between thirty and sixty days ago. But in the last week, another round of negative revisions have come through, dropping the Zacks Consensus Estimates even further. Currently, the consensus for the current year has gone from $1.68 to $1.60, while next year’s number has fallen from $1.95 to $1.71.
It’s no wonder why shares have dropped from nearly $74 to $36 over the last couple of years. This year actually started off bullish for shares of HAL, until the stock ran out of momentum just shy of $50 in May. From there the slide has been very consistent. The 52-week low on August 24th still sits over 15% away from where shares currently trade.
Investors looking for other ideas in the oil services industry should look at Zacks Rank #2 (Buy) stocks CHC Group (HELI – Snapshot Report) and Exterran Holdings (EXH – Snapshot Report).
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