Halliburton Co. (NYSE:HAL)

The analyzed financial data reveals several notable trends in the company’s profitability and leverage metrics over the period from early 2014 to the end of 2018.

Return on Assets (ROA)

The ROA shows an initial absence of data before March 31, 2014, after which it exhibits a declining trend extending through to December 31, 2016. Starting at 10.86% in the first quarter of 2015, ROA progressively drops, turning negative by the first quarter of 2016 and reaching a low of around -21% in the last quarter of 2016. Post-2016, there is a gradual recovery visible, with ROA improving steadily and becoming positive again by the first quarter of 2018, ultimately reaching 6.37% by the end of 2018.

Financial Leverage

Financial leverage remains relatively stable from early 2014, gradually increasing from 2.13 to about 2.39 by the end of 2015. This upward trend continues, peaking at approximately 3.01 in the first half of 2018. After reaching this peak, financial leverage slightly decreases toward the end of 2018. Overall, the leverage ratio indicates a moderate increase in the company's reliance on debt or other liabilities during this timeframe.

Return on Equity (ROE)

ROE data follow a similar pattern to ROA, starting without values initially, then registering 21.52% in the first quarter of 2015. Subsequently, a significant decline is observed, with the ratio dropping sharply into negative territory by 2016. The lowest point occurs around the last quarter of 2016, with ROE values near -60%. After this nadir, there is a gradual recovery trend starting in 2017, crossing back into positive territory in early 2018, and culminating at 17.39% by the end of 2018.

In summary, the period from early 2015 to the end of 2016 was characterized by deteriorating profitability metrics, evidenced by sharp decreases in both ROA and ROE, coupled with increasing financial leverage. However, starting in 2017, there is a clear pattern of financial recovery, with both profitability measures improving and leverage slightly decreasing towards the end of 2018.

Net Profit Margin

The Net Profit Margin initially decreased from positive values in early 2015, starting at 10.65% in the first quarter of 2015, then declining steadily through 2016, reaching its lowest point at -36.27% in the first quarter of 2017. After this significant negative dip, the margin showed gradual improvement, passing through slight negative and near-zero values in late 2017 and early 2018, finally rising to 6.9% by the last quarter of 2018. This indicates a period of substantial losses followed by recovery towards profitability.

Asset Turnover

The Asset Turnover ratio remained relatively stable around 1.0 in 2014 and early 2015, with a peak of 1.06 in the second quarter of 2015. It then declined consistently through 2016 to about 0.59 by the first quarter of 2017, reflecting reduced efficiency in asset utilization. From 2017 through 2018, the ratio improved steadily, reaching 0.92 by the end of 2018, signaling a recovery in asset usage efficiency despite remaining below the initial levels seen in 2014-2015.

Financial Leverage

Financial Leverage started at 2.13 in early 2014 and decreased gradually to around 1.96 by mid-2015. Thereafter, a noticeable increase occurred, peaking at 3.01 during several quarters in 2017 and mid-2018, indicating a greater reliance on debt or other liabilities relative to equity during this period. Toward the end of the series, the leverage showed a slight reduction to 2.73 in the last quarter of 2018, suggesting some deleveraging efforts after the peak leverage period.

Return on Equity (ROE)

ROE mirrored the trends observed in the Net Profit Margin, presenting positive values early in 2015 with a peak at 21.52%. It then sharply declined throughout 2015 and 2016, reaching a nadir of -61.25% in the first quarter of 2017, indicating substantial losses translating into negative shareholder returns. Following this trough, ROE gradually recovered in 2017 and 2018, ultimately reaching a positive 17.39% by the last quarter of 2018, showing a significant restoration of profitability and shareholder value.

Tax Burden

The tax burden ratio exhibited moderate stability initially, with values fluctuating between 0.67 and 0.74 from March 2015 through December 2015. However, beginning in 2017, the ratio showed significant volatility, including negative values in June and September 2017 (-0.69 and -0.42 respectively), indicating unusual tax effects or losses. Toward the end of 2018, the ratio recovered and approached 0.91, suggesting an improvement in tax position or profitability after a turbulent period.

Interest Burden

The interest burden ratio demonstrated a downward trend during 2015, decreasing from 0.92 in March to 0.48 in December, reflecting increased interest expenses relative to EBIT. The ratio remained largely volatile in 2017 and 2018 with values fluctuating between -0.63 and 0.75. The presence of negative and low positive figures indicates significant financial strain affecting earnings before interest and taxes relative to earnings before taxes and interest.

EBIT Margin

The EBIT margin showed a clear decline beginning in early 2015, decreasing sharply from 15.73% in March 2015 to a low of -43.58% in December 2016, signaling sustained operational losses during this period. After this trough, the margin gradually improved from 2017 through the end of 2018, moving back into positive territory by mid-2017 and continuing an upward trend to reach approximately 10.05% by December 2018. This recovery suggests improving operational efficiency or market conditions.

Asset Turnover

Asset turnover remained relatively stable with slight fluctuations over the observed periods. From a peak of around 1.06 in mid-2014, it declined steadily through 2016, falling to approximately 0.59 by March 2017, indicating reduced efficiency in generating sales from assets. Subsequently, asset turnover recovered moderately, reaching around 0.92 by the end of 2018, showing a positive trend in asset utilization.

Financial Leverage

Financial leverage ratios ranged between approximately 1.95 and 3.01 throughout the time frame. The trend indicates a general increase in leverage, with a notable rise from below 2.0 in early 2015 to over 2.8 by late 2017 and sustaining levels above 2.7 into 2018. This increased leverage could imply growing reliance on debt or amplified financial risk.

Return on Equity (ROE)

Return on equity displayed substantial volatility and a downward trajectory starting in 2015 with positive returns above 20% dropping to deep negative values reaching nearly -61% in late 2016. This reflects significant losses impacting shareholders’ equity. Post-2016, ROE indicates partial recovery, though it remained mostly negative or marginally positive throughout 2017 and early 2018. By the end of 2018, ROE had improved to 17.39%, suggesting a notable turnaround in profitability and efficiency in generating returns for equity holders.

Net Profit Margin

The net profit margin begins in the first reported period with a positive value of 10.65%, but subsequently shows a consistent declining trend. From mid-2015, the margin decreases steadily, turning negative by March 2016 at -2.84%, and reaches its lowest point around the end of 2016 at -36.27%. Following this trough, the margin gradually recovers in 2017 and into 2018, regaining positive ground with a notable improvement to 6.9% by the end of the reported periods. This pattern indicates a period of significant profitability challenges followed by a recovery phase.

Asset Turnover

Asset turnover starts above 1.0 in early 2015, peaking at 1.06, before decreasing sharply through 2016 to around 0.59. From early 2017 onwards, there is a clear upward trend towards improved efficiency in asset use, rising consistently to approximately 0.92 by the end of 2018. This suggests a recovery in the ability to generate sales from assets after a period of diminished efficiency.

Return on Assets (ROA)

Return on assets shows a trend closely mirroring that of the net profit margin. It commences around 10.86% in early 2015 and declines steadily through mid-2016, becoming negative at -1.82% in the first quarter of 2016 and hitting a low of roughly -21% by the end of 2016. Thereafter, ROA demonstrates gradual improvement throughout 2017 and 2018, turning positive again and reaching 6.37% by year-end 2018. This reflects the underlying trends in profitability and asset efficiency over the same period.

Summary of Trends

Collectively, the data reveals an initial phase of strong profitability and asset utilization until early 2015, followed by a significant downturn through 2016 marked by negative profitability and reduced asset turnover. From 2017 onwards, the company appears to have embarked on a recovery trajectory, improving operational efficiency and regaining positive profitability ratios by the end of the period. The general pattern is one of decline, trough, and gradual recovery across all key financial performance metrics.

Tax Burden

From the available data starting in March 2015, the tax burden generally ranges around the low to mid 0.7s through the first half of 2015, indicating a relatively stable tax impact on pre-tax earnings during this period. However, in 2017 and early 2018, the ratio becomes highly volatile, including negative values in mid and late 2017, indicating unusual tax effects or adjustments negatively impacting net income relative to earnings before tax. By the end of 2018, the tax burden recovers to a positive level near 0.9, suggesting normalization.

Interest Burden

The interest burden ratio decreases steadily from early 2015 to the end of that year, falling from 0.92 to 0.48, demonstrating increasing interest expenses or lower earnings before interest and taxes relative to EBIT. After a gap in data, the ratio resumes with volatile values in 2017 and 2018, fluctuating from negative to positive and ending between 0.72 and 0.75, indicating variability in interest costs or financing structure with some recovery by late 2018.

EBIT Margin

The EBIT margin shows a clear downward trend from Q1 2015 through much of 2016, moving from a positive 15.73% to deeply negative figures, reaching nearly -43.58%. This suggests deteriorating operating profitability through this period. Beginning Q1 2017, the margin starts to improve gradually, moving back to positive territory by mid-2017 and continuing an upward trajectory through 2018, ending at just above 10%, approaching previous profitable levels.

Asset Turnover

Asset turnover remains relatively stable in 2015, slightly declining from just above 1.0 to around 0.9, followed by a significant drop in early 2016 to approximately 0.59. From 2017 onward, the ratio shows a consistent, progressive increase, reaching approximately 0.93 by late 2018. This improvement indicates enhanced efficiency in using assets to generate sales after a period of operational challenges.

Return on Assets (ROA)

Return on assets follows a pattern similar to the EBIT margin, with positive performance in early 2015 declining sharply through 2016 to substantial negative values near -21%. This reflects significant losses relative to total assets in that period. From 2017, ROA fluctuates near zero and improves progressively over 2018, ending at a positive 6.37%, indicative of a recovery in overall asset profitability aligned with improving operational results and asset utilization.

The analysis of the quarterly financial data reveals distinct trends and fluctuations in key profitability and burden ratios over the observed periods.

Tax Burden Ratio

This ratio begins at about 0.73 to 0.74 in 2015, indicating that approximately three-quarters of earnings before tax were retained after taxes in the first half of the year. It experiences a decline reaching as low as 0.06 by the end of 2018, including some negative values in mid-2017 and early 2018, which may suggest the occurrence of tax benefits or losses carried back affecting tax expenses. A subsequent recovery is observable towards the later quarters, ending high near 0.91 in late 2018, indicating improved tax efficiency or profitability impacting the tax burden positively.

Interest Burden Ratio

The interest burden ratio shows a gradual decline from 0.92 in early 2015 to a low of 0.48 towards the end of that year, implying increased interest expenses relative to earnings before interest and taxes (EBIT). Following this, the values fluctuate more widely, even showing negative values around 2017, which could indicate accounting adjustments or period-specific financial conditions affecting interest costs. Eventually, a positive and stabilizing trend is seen in 2018, reaching approximately 0.75 by year-end, suggesting an improved ability to cover interest expenses from operating profits.

EBIT Margin

The EBIT margin exhibits a clear downward trajectory starting at a robust 15.73% in early 2015 and deteriorates over two years, eventually plunging to a negative margin of around -43.58% by the end of 2016. This steep decline indicates operational challenges and reduced profitability before interest and tax effects. From 2017 onwards, a recovery is evident as margins gradually rise to about 10.05% by late 2018, reflecting improved operational performance and cost management over the latter periods.

Net Profit Margin

Similarly, the net profit margin declines markedly, starting near 10.65% in early 2015, falling into negative territory from late 2015 through early 2017, with the lowest point around -36.27%. This reflects significant losses after all expenses including taxes and interest. The margin shows some volatility but trends upward from 2017, reaching a positive 6.9% in late 2018. This recovery signals an overall return to profitability, likely supported by improvements in operations and burden ratios.

Overall, the data reveals a period of considerable financial stress with substantial declines in profitability margins between 2015 and 2016, accompanied by increased burden ratios indicative of higher tax and interest impacts. The latter periods show signs of stabilization and recovery across all key financial metrics, indicating a turnaround phase ensued after the trough in 2016 and early 2017.