Halliburton

Methodology

Halliburton's oilfield services business creates highly cyclical earnings tied to global oil prices, drilling activity, and completion spending by exploration companies. The company's leading position in fracking services drives profitability during drilling booms. This calculation is very challenging given extreme cyclicality—normalized assumptions about mid-cycle oil prices and rig counts are essential, while peak cycle earnings dramatically overstate sustainable profitability.

Methodology

Halliburton's PEG ratio swings wildly across energy cycles, often appearing cheap during recoveries but potentially signaling peak conditions. The company's leverage to North American shale activity creates both opportunity and risk. For oilfield services, PEG based on cyclical earnings growth is misleading—valuation should focus on normalized mid-cycle profitability relative to replacement cost and commodity price assumptions.

Methodology

Halliburton pays a modest dividend when profitability allows, but dividend sustainability depends heavily on oil market conditions. The company prioritizes maintaining the dividend through downturns when possible but must preserve balance sheet strength. PEGY has limited applicability given earnings and dividend volatility—for oilfield services, cycle timing and oil price outlook matter far more than dividend-adjusted earnings metrics.