Halliburton Company (HAL)

Conclusion

Halliburton Company provides products and services to the energy industry worldwide, organised in two segments: Completion and Production, and Drilling and Evaluation. On 2026-11-09 the shares closed at 31.88 USD, giving a market capitalisation of 26.4 billion USD and an enterprise value of 32.7 billion USD.

The verdict is undervalued. The company trades below its own ten-year medians on every multiple: a P/E of 13.2 against a median of 18.1, a premium of -27.2%, and an EV/EBITDA of 8.1 against a median of 10.0, a premium of -19.2%. The DCF gives 44.64 USD per share at a discount rate of 8.9%. The fair value band runs from 34.37 to 51.55 USD with a midpoint of 42.96 USD, a margin of safety of 34.8% at the current price. The reverse DCF implies growth of 2.9% a year, against revenue growth of 9.0% over five years, so the price asks for less growth than the company has delivered.

The case rests on three numbers: a Altman Z-score of 3.43, a free cash flow conversion of 80.0% over the last twelve months, and a ROIC of 11.9% against a WACC of 7.6%. The weak points are earnings per share, which fell at a compound rate of -4.1% over three years, a ROIC below its five-year median of 15.1%, and revenue that declined at -0.6% a year over ten years.

Financial health

The financial strength is green, held up by four metrics assessed as good: an Altman Z-score of 3.43, net debt to EBITDA of 1.6x, interest coverage of 9.8x and a current ratio of 2.02. The quick ratio is 1.22 and debt to equity is 0.74. The Altman Z-score of 3.43 falls in the safe zone, although that model was designed for manufacturers, and Halliburton is a services company. The insolvency risk is low, about 0.45% by the estimate of the Ohlson model over one to two years, as at 2025-12-31. The balance sheet shows no strain on the figures provided.

Earnings quality

Earnings quality is green. Free cash flow conversion is 80.0% on a trailing twelve-month basis and 90.1% over five years. The accrual ratio is -6.5%, which means cash earnings exceed reported earnings. Free cash flow after stock-based compensation is 1.6 billion USD over twelve months, but stock-based compensation as a share of revenue is not available, so its weight cannot be judged. The share count fell at a compound rate of -0.95% over five years, which reflects buybacks. The Piotroski score is 4 out of 9. The Beneish M-score is not available. The company beat earnings estimates in 5 of the last 8 quarters, with an average surprise of 7.1%. Estimates for next year rose in 4 revisions and fell in 8 over the last 30 days.

Profitability

Profitability is green. The gross margin is 15.0% against a ten-year median of 12.8%, the operating margin is 12.6% against 10.2%, and the net margin is 8.9% against 6.3%. The operating margin stability figure is 7.1. The return on invested capital is 11.9% against a WACC of 7.6%, a ROIC minus WACC value of 4.3%, which creates value. However, ROIC sits below its five-year median of 15.1%. The return on equity of 18.0% is flattered by leverage: the DuPont split at the end of 2025 shows a net margin of 5.8%, an asset turnover of 0.89 and an equity multiplier of 2.39.

Growth

Growth is yellow. Revenue grew at a compound rate of 3.0% over three years, 9.0% over five years and -0.6% over ten years. Revenue rose in 5 of the 10 comparable years. Earnings per share fell at a compound rate of -4.1% over three years, while free cash flow per share grew at 13.7% over three years, 8.8% over five years and 8.9% over ten years. Analysts expect earnings per share to grow by 25.9% next year, a forecast that will need to be met to support the current valuation.

Valuation

Valuation is green. Today's multiples sit below their ten-year medians: P/E 13.2 against 18.1, EV/EBITDA 8.1 against 10.0, price to free cash flow 16.5 against 20.8, price to sales 1.17 against 1.35 and price to book 2.37 against 3.38. The DCF gives 44.64 USD per share with a discount rate of 8.9%, a first-stage growth rate of 9.0% and a terminal growth rate of 2.5%. The terminal value makes up 58.3% of that figure. The fair value from historical multiples is 41.28 USD. The fair value band is an estimate built on fixed assumptions, including a 5% equity risk premium and capped growth, and is not a price target. The dividend yield is 2.2%, with a payout of 35.6% of free cash flow.

Risks

A fall in free cash flow conversion from its current 80.0% would weaken the cash backing for the earnings and reduce the appeal of the buybacks. A ROIC that stays below its five-year median of 15.1% would keep the spread over the WACC of 7.6% narrow. Continued declines in earnings per share, down 4.1% a year over three years, would undermine the margin of safety, which depends on the market accepting the next-year growth forecast of 25.9%. A higher discount rate or lower terminal growth would reduce the DCF of 44.64 USD. Stock-based compensation as a share of revenue and the Beneish M-score are not available. This analysis has no debt maturity schedule and no revenue split by segment, so it cannot judge refinancing risk or which business lines drive growth.