HAL
HAL
Hold 2026-03-26
Model
DCF
Price at Report
$38.63
Base IV
$29.66
Bear IV
$15.27
Bull IV
$47.78
Entry Zone: 16-27 · Sell Above: 41
Bore Family Office
Valuation Report — Halliburton Company (HAL) • March 26, 2026
Unlevered DCF (FCFF @ WACC) • Discount Rate: 9.90% • Current Price: $38.63
Prepared by Lurch • Bore Family Office • Data: Finnhub, StockAnalysis.com, S&P Global Market Intelligence
🏢 Business Overview
Halliburton Company is one of the world's largest oilfield services companies, providing products and services to the energy industry for the exploration, development, and production of oil and gas. Founded in 1919, it serves customers in over 70 countries with two primary divisions: Completion & Production (perforating, stimulation, cementing) and Drilling & Evaluation (directional drilling, wireline, formation evaluation). HAL competes directly with SLB (Schlumberger) and Baker Hughes, holding roughly 20% market share in global oilfield services. Its technology platform — including the iCruise intelligent drilling system and LOGIX autonomous drilling — positions it as a premium provider in an industry moving toward automation and efficiency.
| Business Segment | Revenue | % of Total | YoY Growth | Margin | Notes |
|---|---|---|---|---|---|
| Completion & Production | $12,280M | 55% | -2.8% | — | Largest segment — well stimulation (pressure pumping), cementing, completions tools. N. America pressure pumping pricing softened in FY2025. |
| Drilling & Evaluation | $9,904M | 45% | -3.9% | — | Directional drilling, wireline logging, formation evaluation. More geographically diversified; international growth partially offsetting N. America weakness. |
| Blended Growth Rate | — | 100% | -3.3% | — | Weighted avg across segments |
🔍 Quality Scorecard
| Metric | Value | Assessment |
|---|---|---|
| ROIC | 14.0% | ≥12% strong |
| FCF Margin | 7.5% | 5–10% adequate |
| Debt / EBITDA | 2.4x | 2–4x moderate |
| Revenue Trend | Declining 3yr | 3-year directional trend |
| FCF Margin Trend | Contracting | Directional margin trajectory |
| Analyst Revisions | Upward revisions | Last 90 days consensus direction |
⚠️ Elevated value trap risk — verify thesis before acting
📊 Financial Snapshot
| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue ($M) | $15,295 | $20,297 | $23,018 | $22,944 | $22,184 |
| Rev YoY Growth | — | +32.7% | +13.4% | -0.3% | -3.3% |
| Gross Margin | 13.2% | 16.3% | 18.9% | 18.7% | 15.7% |
| EBITDA ($M) | $2,704 | $3,647 | $5,081 | $4,901 | $3,396 |
| EBITDA Margin | 17.7% | 18.0% | 22.1% | 21.4% | 15.3% |
| Operating Income ($M) | $1,800 | $2,707 | $4,083 | $3,822 | $2,260 |
| Operating Margin | 11.8% | 13.3% | 17.7% | 16.7% | 10.2% |
| Net Income ($M) | $1,457 | $1,572 | $2,638 | $2,501 | $1,283 |
| Net Margin | 9.5% | 7.7% | 11.5% | 10.9% | 5.8% |
| EPS (diluted) | $1.63 | $1.73 | $2.92 | $2.83 | $1.50 |
| Free Cash Flow ($M) | $1,112 | $1,231 | $2,079 | $2,423 | $1,672 |
| Annual DPS | $0.180 | $0.480 | $0.640 | $0.680 | $0.680 |
| Total Debt ($M) | $10,212 | $8,943 | $8,809 | $8,602 | $8,133 |
📈 DCF Scenarios
$15
🔴 Bear
$30
📊 Base
$48
🚀 Bull
$38.63
Current Price
$35
Analyst Avg PT
| Scenario | Stage 1 (Yrs 1–5) | Stage 2 (Yrs 6–10) | Terminal g | WACC | Intrinsic Value | vs Price |
|---|---|---|---|---|---|---|
| 🔴 Bear | 2.0% | 2.0% | 2.0% | 9.90% | $15 | ▼60.5% |
| 📊 Base | 6.5% | 4.0% | 2.5% | 9.90% | $30 | ▼23.2% |
| 🚀 Bull | 11.0% | 6.0% | 3.0% | 9.90% | $48 | ▲23.7% |
📋 Full 10-Year Projection Tables
Bear Scenario
Stage 1: 2.0% | Stage 2: 2.0% | Terminal: 2.0%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 ✦ | Stage 1 | $1.50B | $1.36B | $1.36B |
| Year 2 ✦ | Stage 1 | $1.53B | $1.27B | $2.63B |
| Year 3 ✦ | Stage 1 | $1.56B | $1.18B | $3.81B |
| Year 4 ✦ | Stage 1 | $1.59B | $1.09B | $4.90B |
| Year 5 ✦ | Stage 1 | $1.62B | $1.01B | $5.91B |
| Year 6 | Stage 2 | $1.65B | $0.94B | $6.85B |
| Year 7 | Stage 2 | $1.69B | $0.87B | $7.72B |
| Year 8 | Stage 2 | $1.72B | $0.81B | $8.52B |
| Year 9 | Stage 2 | $1.75B | $0.75B | $9.27B |
| Year 10 | Stage 2 | $1.79B | $0.70B | $9.97B |
| Terminal | — | TV=$23.1B | PV(TV)=$9.0B (47% of EV) | EV=$19.0B |
| Intrinsic Value | — | — | EV $19.0B − Net Debt → Equity / Shares | $15 |
How the price per share is derived: Each year's projected free cash flow is discounted back at WACC (9.90%) to get its present value. After Year 10, FCF grows at the terminal rate (2.0%) in perpetuity — the Gordon Growth formula gives a terminal value of FCF11 / (WACC − gT) = $23.1B. That terminal value is discounted back 10 years to today's dollars (PV of TV = $9.0B). Enterprise Value = PV of FCFs ($10.0B) + PV of TV ($9.0B) = $19.0B. Subtracting net debt gives equity value of $13.0B, divided by shares outstanding = $15 per share.
Base Scenario
Stage 1: 6.5% | Stage 2: 4.0% | Terminal: 2.5%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 ✦ | Stage 1 | $1.85B | $1.68B | $1.68B |
| Year 2 ✦ | Stage 1 | $2.05B | $1.70B | $3.38B |
| Year 3 ✦ | Stage 1 | $2.20B | $1.66B | $5.04B |
| Year 4 ✦ | Stage 1 | $2.35B | $1.61B | $6.65B |
| Year 5 ✦ | Stage 1 | $2.50B | $1.56B | $8.21B |
| Year 6 | Stage 2 | $2.60B | $1.48B | $9.68B |
| Year 7 | Stage 2 | $2.70B | $1.40B | $11.08B |
| Year 8 | Stage 2 | $2.81B | $1.32B | $12.40B |
| Year 9 | Stage 2 | $2.92B | $1.25B | $13.65B |
| Year 10 | Stage 2 | $3.04B | $1.18B | $14.84B |
| Terminal | — | TV=$42.1B | PV(TV)=$16.4B (52% of EV) | EV=$31.2B |
| Intrinsic Value | — | — | EV $31.2B − Net Debt → Equity / Shares | $30 |
How the price per share is derived: Each year's projected free cash flow is discounted back at WACC (9.90%) to get its present value. After Year 10, FCF grows at the terminal rate (2.5%) in perpetuity — the Gordon Growth formula gives a terminal value of FCF11 / (WACC − gT) = $42.1B. That terminal value is discounted back 10 years to today's dollars (PV of TV = $16.4B). Enterprise Value = PV of FCFs ($14.8B) + PV of TV ($16.4B) = $31.2B. Subtracting net debt gives equity value of $25.3B, divided by shares outstanding = $30 per share.
✦ Year-by-year analyst consensus FCF estimates (Base scenario)
Bull Scenario
Stage 1: 11.0% | Stage 2: 6.0% | Terminal: 3.0%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 ✦ | Stage 1 | $2.05B | $1.87B | $1.87B |
| Year 2 ✦ | Stage 1 | $2.40B | $1.99B | $3.85B |
| Year 3 ✦ | Stage 1 | $2.75B | $2.07B | $5.92B |
| Year 4 ✦ | Stage 1 | $3.10B | $2.13B | $8.05B |
| Year 5 ✦ | Stage 1 | $3.45B | $2.15B | $10.20B |
| Year 6 | Stage 2 | $3.66B | $2.08B | $12.28B |
| Year 7 | Stage 2 | $3.88B | $2.00B | $14.28B |
| Year 8 | Stage 2 | $4.11B | $1.93B | $16.21B |
| Year 9 | Stage 2 | $4.36B | $1.86B | $18.07B |
| Year 10 | Stage 2 | $4.62B | $1.80B | $19.87B |
| Terminal | — | TV=$68.9B | PV(TV)=$26.8B (57% of EV) | EV=$46.7B |
| Intrinsic Value | — | — | EV $46.7B − Net Debt → Equity / Shares | $48 |
How the price per share is derived: Each year's projected free cash flow is discounted back at WACC (9.90%) to get its present value. After Year 10, FCF grows at the terminal rate (3.0%) in perpetuity — the Gordon Growth formula gives a terminal value of FCF11 / (WACC − gT) = $68.9B. That terminal value is discounted back 10 years to today's dollars (PV of TV = $26.8B). Enterprise Value = PV of FCFs ($19.9B) + PV of TV ($26.8B) = $46.7B. Subtracting net debt gives equity value of $40.8B, divided by shares outstanding = $48 per share.
🔲 Sensitivity Table
| WACC \ gT | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 7.9% | $37 | $39 | $42 | $45 | $49 |
| 8.4% | $34 | $35 | $38 | $40 | $43 |
| 8.9% | $31 | $32 | $34 | $36 | $39 |
| 9.4% | $28 | $29 | $31 | $33 | $35 |
| 9.9% | $26 | $27 | $28 | $30 | $31 |
| 10.4% | $24 | $25 | $26 | $27 | $29 |
| 10.9% | $22 | $23 | $24 | $25 | $26 |
| 11.4% | $21 | $21 | $22 | $23 | $24 |
| 11.9% | $19 | $20 | $20 | $21 | $22 |
Green = >10% above current price. Red = >10% below. Gold = within ±10%.
📉 Long-Term Price Trend Channel
Log-linear trend fitted to full price history. ±1.5σ bands. Green shaded zone = bottom 25% of historical range — historically attractive entry.
💰 Dividend / Distribution Analysis
| Metric | Value |
|---|---|
| Annual DPS | $0.680 |
| Current Yield | 1.76% |
| Consecutive Growth Years | 4 |
| 1-yr DPS CAGR | +0.0% |
| 3-yr DPS CAGR | +28.2% |
| 5-yr DPS CAGR | +30.4% |
| 10-yr DPS CAGR | — |
| Payout Ratio (DPS/EPS) | 45.3% |
| FCF Payout Ratio | 40.7% |
| Sustainability Verdict | Safe |
HAL's dividend is well-covered at 45% payout on GAAP EPS and 41% on FCF. Even at trough FY2025 FCF, the $580M total dividend cost is easily covered by $1.67B FCF. Dividend safe; growth likely resumes with earnings recovery.
🔮 Analyst Forecast Section
(a) EPS Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2021 | $1.63 | — | — | — | Actual |
| 2022 | $1.73 | — | — | — | Actual |
| 2023 | $2.92 | — | — | — | Actual |
| 2024 | $2.83 | — | — | — | Actual |
| 2025 | $1.50 | — | — | — | Actual |
| 2026 | $1.96 | $2.25 | $2.92 | 29 | Estimate |
| 2027 | $1.90 | $2.70 | $3.36 | 29 | Estimate |
(b) Revenue Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2021 | $15.3B | — | — | — | Actual |
| 2022 | $20.3B | — | — | — | Actual |
| 2023 | $23.0B | — | — | — | Actual |
| 2024 | $22.9B | — | — | — | Actual |
| 2025 | $22.2B | — | — | — | Actual |
| 2026 | $20.8B | $21.9B | $23.0B | 29 | Estimate |
| 2027 | $21.0B | $22.7B | $25.0B | 29 | Estimate |
(c) Individual Analyst Price Targets
| Analyst | Firm | Rating | PT | Upside |
|---|---|---|---|---|
| Phillip Jungwirth | BMO Capital | Hold | $42 | +8.7% |
| Neil Mehta | Goldman Sachs | Strong Buy | $40 | +3.5% |
| Scott Gruber | Citigroup | Strong Buy | $38 | -1.6% |
| Josh Silverstein | UBS | Hold | $35 | -9.4% |
| Arun Jayaram | JP Morgan | Buy | $35 | -9.4% |
💡 Investment Thesis
- International Cycle Not Peaked: Middle East, Latin America, and Asia-Pacific upstream spending is in a multi-year expansion cycle. HAL's international revenue (≈55% of total) should grow 5–8%/yr as national oil companies accelerate development.
- Technology Moat in Drilling: iCruise and LOGIX autonomous drilling reduce customer costs and increase well performance — driving HAL specification by operators over competitors. Technology revenue commands 5–8% premium margins vs. commodity services.
- FCF Engine + Capital Return: $1.7–2.4B annual FCF with 45% payout ratio leaves $1.0B+ for buybacks annually. Buyback yield ~3.4% + dividend yield 1.8% = 5.2% total shareholder yield at current price.
- Valuation Reset: HAL trades at 13.5× FY2026 consensus EPS ($2.25) — below its 5-year average P/E of 17× and at a significant discount to SLB (~18×). Re-rating opportunity as earnings recover.
- Balance Sheet Improving: Net debt declining from $7.2B (2021) to $5.9B (2025) with ~$500M annual debt reduction. Investment grade rated.
⚖️ DCF Verdict: Hold — Halliburton Company (HAL)
Current price: $38.63 | Analyst Avg PT: $34.71
$15
🔴 Bear
$30
📊 Base
$48
🚀 Bull
| Tier | Price | Action |
|---|---|---|
| Tier 1 — Starter | ≤$27 | Begin position |
| Tier 2 — Add | ≤$22 | Add on weakness |
| Tier 3 — Full | ≤$16 | Full allocation |
| Sell Alert | ≥$41 | Above fair value — consider trimming |
How tiers are set: Tier 1 = Base IV × 0.92 (8% discount to base case). Tier 2 = midpoint of Bear & Base IV (building on meaningful weakness). Tier 3 = Bear IV × 1.05 (just above worst-case — maximum margin of safety). Sell alert = Bull IV × 0.85 (15% discount to bull case — above fair value range).
HAL is rated Accumulate — the stock is trading above our Base case IV of $29.46 but analyst consensus PT of $34.71 implies near-term downside risk even on a recovery scenario. The stock has run ahead of fundamentals; the international cycle recovery is real but takes time to flow through to FCF. Initiate/add on pullbacks to $30–32, which represents our Base IV entry zone. Current holders may trim a portion above $40 (Bull IV).
🔧 Model Notes & Calibration
| Assumption | Rationale / Notes |
|---|---|
| FCF Base Selection | FY2025 FCF of $1,672M reflects cycle trough. FY2023–2025 average = $2,058M. Used $1,750M as Base FCF — conservative, reflects current trough plus modest recovery. Analyst consensus implies EPS recovery to $2.25 in FY2026; at 85% FCF/NI ratio and 853M shares → ~$1,625M FCF. $1,750M Base is slightly above that — justified by international margin expansion trend. |
| WACC Build | β=1.30 (energy services, highly cyclical); Rf=4.25%; ERP=5.50%. Ke = 4.25% + 1.30×5.50% = 11.40%. Kd = 5.20% pre-tax (BBB rated), after-tax 3.95% (24% normalized tax). We=80.3% (mkt cap $33B), Wd=19.7% ($8.1B debt). WACC = 0.803×11.40% + 0.197×3.95% = 9.93% → 9.9%. |
| Sanity Check | Initial Base IV ~$29. Analyst consensus PT $34.71 → divergence ~-16%. Within ±20% threshold. No adjustments needed. The lower Base IV vs current price ($38.63) reflects HAL's elevated valuation relative to its FCF trough — market is pricing in the recovery that hasn't shown up in numbers yet. |
| Model Selection | DCF preferred over DDM for HAL. The $0.68 annual dividend at 1.76% yield does not represent distributable earnings power — HAL has cut dividends before and the payout ratio is low (45%). FCF-based valuation better captures the business cycle and capital allocation flexibility (buybacks >> dividends in terms of total return). DDM would dramatically undervalue the earnings power. |
Bore Family Office • Analysis generated by Lurch • Not investment advice.