Halliburton Company

HAL Details

Halliburton Company (NYSE: HAL) is a prominent provider of energy-related goods and services. It assists clients in maximizing value across the reservoir lifecycle, from identifying hydrocarbons to drilling and optimizing production across the asset's lifespan. Completion & Production and Drilling & Evaluation are the two segments that create money for the firm. As of November 04, 2021, HAL's market capitalization stood at USD 22.01 billion.

Latest News:

• Deployment of DecisionSpace 365: On November 02, 2021, HAL stated that Landmark's Digital Well Program had been successfully deployed as a fundamental component of BP's Well Design Optimizer project. The solution relies on the DecisionSpace 365 cloud application that integrates planning and design procedures into a single, open platform to revolutionize how wells are built and delivered.
• New Contract: HAL was granted an integrated services contract for a well drilling and completions operation in the Eastern Mediterranean for Energean, an independent E&P firm focused on the Mediterranean and the North Sea regions, on September 14, 2021.

9MFY21 Results:

• Slight Decline in Revenues: HAL witnessed a minor decrease of 1.70% in its total revenue to USD 11.02 billion during 9MFY21 (ended September 30, 2021) compared to USD 11.21 billion during 9MFY20, primarily driven by lower activity associated with completion tool sales globally.
• Progress in Net Income: The company recorded a net income of USD 0.64 billion during 9MFY21 vs. a net loss of USD 2.72 billion during 9MFY20.
• Leveraged Balance Sheet: As of September 30, 2021, the company had cash and cash equivalents of USD 2.63 billion and total debt of USD 9.14 billion.

Key Risks:

• Raw Material Risk: Shortages of raw materials due to excessive demand or the loss of suppliers during market downturns can cause supply chain limitations for those resources, especially if the firm has a single supplier for a specific resource. These limits might have a significant negative impact on the company's operations and cash flows.
• Exchange Rate Fluctuation: Foreign currencies account for a significant amount of the company's consolidated revenue and operational expenditures. As a result, any negative exchange rate movement would be detrimental to the company's bottom line.

Valuation Methodology: Price/Earnings Per Share Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

HAL Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

HAL's share price has surged 92.92% in the past twelve months and is currently leaning towards the higher-band of the 52-week range of USD 12.27 to USD 26.75. The stock is currently trading above its 50 and 200 DMA levels, and its RSI Index is at 50.68. We have valued the stock using the Price/Earnings-based relative valuation methodology and arrived at a target price of USD 22.24.

Considering the significant uptick in the stock price and other technical indicators, we believe the decent business fundamentals are adequately reflected at the current trading levels. Hence, we recommend a "Sell" rating on the stock at the closing price of USD 24.52, down 0.81% as of November 04, 2021.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV. 

FMC Corporation

FMC Details

FMC Corporation (NYSE: FMC) is an agricultural sciences firm that offers a diverse product range to producers for crop protection, plant health, pest and turf management. FMC is involved in developing, marketing, and selling insecticides, herbicides, fungicides, biologicals, crop nutrition, and seed treatment. As of November 04, 2021, FMC's market capitalization stood at USD 13.54 billion.

Latest News:

• Positive Decision in Patent Infringement Lawsuit: On September 13, 2021, FMC reported that the Qingdao Intermediate Court in China had ruled in favor of the company in the chlorantraniliprole patent infringement case against Shandong Weifang Rainbow Chemical Co. Ltd. (Rainbow). As a result, Rainbow was ordered to stop manufacturing, distributing, and utilizing chlorantraniliprole, an active insecticidal chemical, in its decision and reimburse FMC for damages.

9MFY21 Results:

• Improvement in Revenues: FMC reported an increase of 4.06% in its revenues to USD 3.63 billion during 9MFY21 (ended September 30, 2021) compared to USD 3.49 billion during 9MFY20, primarily driven by an increase in volumes and favorable currency exchange rates.
• Progress in Net Income: The company recorded a net income of USD 546.8 million during 9MFY21 vs. USD 503.3 million during 9MFY20.
• Leveraged Balance Sheet: As of September 30, 2021, the company had cash and cash equivalents of USD 341.0 million and total debt of USD 3.39 billion.

Key Risks:

• Foreign Exchange Rate Risk: FMC is a multinational corporation with operations in various countries. As a result, it is exposed to foreign exchange rate risk in the usual course of business. BRL, EUR, INR, RMB, MXN, ARS, and the USD are highly volatile for FMC. The danger arises even if currency forward contracts have been employed to counteract price volatility. As a result, any negative exchange rate movement would be detrimental to the company's bottom line.
• Weather Risk: FMC is in the agriculture business, which is affected by weather and seasonal conditions, resulting in lower demand. Furthermore, adverse changes in the cost of goods, such as chemical raw materials and harvested crops, might harm the company's finances.

Outlook:

• Q4FY21 Estimates: FMC forecasts its Q4FY21 revenue to range from USD 1.27 – 1.47 billion, with adjusted EBITDA of USD 343 – 403 million, as of November 02, 2021. The adjusted diluted EPS is estimated to be in the range of USD 1.80 – 2.20.
• FY21 Estimates: Its FY21 revenues are anticipated to be in the range of USD 4.9 – 5.1 billion, with an adjusted EBITDA of USD 1.29 – 1.35 billion. As a result, FMC anticipates adjusted EPS to range from USD 6.59 to USD 6.99.

Valuation Methodology: Price/Earnings Per Share Multiple Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

FMC Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

FMC's stock price has surged 12.50% in the past month and is currently leaning towards the mid-band of its 52-week range of USD 87.27 to USD 123.66. The stock is currently trading between its 50 and 200 DMA levels, and its RSI Index is at 72.41, indicating an overbought zone. We have valued the stock using the Price/Earnings-based relative valuation methodology and arrived at a target price of USD 99.01.

Considering the significant uptick in the stock price in a short span and other technical indicators, we believe the decent business fundamentals are adequately reflected at the current trading levels. Hence, we recommend a "Sell" rating on the stock at the closing price of USD 104.35, down 0.82% as of November 04, 2021.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.

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