Halliburton reported third-quarter earnings on Monday morning that met analyst expectations. Revenue, however, came in weak and the stock was falling in premarket trading, down more than 1% ahead of the company’s 9 a.m. ET conference call.
The oil service company continues to struggle in North America, where companies have cut back on drilling, and better international results haven’t made up for the shortfall. Halliburton posted 34 cents of earnings per share on $5.55 billion in revenue.
Wall Street had expected 34 cents on $5.8 billion in revenue. The company’s revenue fell 6% year over year.
Its earnings per share were boosted by an interest and tax issue, with operating earnings coming in slightly below expectations. Halliburton stock is down 31% this year, though investors have seen some signs of hope.
Revenue in North America, which accounts for more than half of Halliburton’s sales, is on a steep downhill slide, falling 11% quarter over quarter, “primarily associated with lower activity and pricing in pressure pumping and well construction services in North America land,” the company said.
International revenue was flat, though it is up 10% cumulatively in the first three quarters of 2019 compared with the first three quarters of 2018. Halliburton depends more on North America than top competitor Schlumberger (SLB)
One positive from the earnings release is that Halliburton appears to be unwilling to lower prices to win business. “We believe by holding the line on pricing and focusing on returns, lower revenue should ultimately lead to better returns when the market stabilizes (we applaud this strategy),” wrote Evercore analyst James West.
As with other energy stocks, some investors like Halliburton for its dividend—now at 3.9%—more than its current growth prospects. The company appears to be getting more cautious about other aspects of its shareholder return policy, however.
Halliburton did not buy back any shares in the third quarter, and has spent $100 million on buybacks year to date, down from $200 million in the same period in 2018.
Halliburton stock has dropped 1.2% to $18.21 at 9:07 a.m. in premarket trading, while Schlumberger has risen 0.6% to $32.51. S&P 500 futures have advanced 0.4%, while Dow Jones Industrial Average futures have ticked up 44 points, or 0.2%.