Breaking Down Halliburton Company (HAL) Financial Health: Key Insights for Investors

You're looking at Halliburton Company (HAL) and trying to cut through the noise of a volatile oilfield services market, so let's get straight to the numbers: the third quarter of 2025 showed a clear divergence between reported and adjusted performance, a key distinction for any investor. While the headline GAAP net income was a modest $18 million, or $0.02 per diluted share, that figure was heavily impacted by $392 million in impairments and other charges; the true operational strength shines through in the adjusted net income of $496 million, translating to $0.58 per diluted share, which beat analyst consensus. Here's the quick math: the company delivered total revenue of $5.6 billion and a strong adjusted operating margin of 13%, plus they returned cash to shareholders with approximately $250 million in share repurchases, all while generating $276 million in free cash flow (FCF). The near-term opportunity is clear: management is taking steps to drive $100 million in quarterly savings, but you defintely need to understand how the shifting international-versus-North America revenue mix impacts the full-year FCF forecast of $1.814 billion.

Revenue Analysis

You need to know exactly where Halliburton Company (HAL) is making its money to judge its stability, and the story for 2025 is a clear pivot: international growth is holding the line against a softer North American market. The company's total revenue for the trailing twelve months ending September 30, 2025, stood at $22.14 billion, reflecting a year-over-year decline of -4.06%. That's a significant drop, and it tells you the market is tighter.

The primary revenue streams for Halliburton Company are split between two core business segments, both focused on the oil and gas lifecycle. In the third quarter of 2025 (Q3 2025), these segments contributed to a total quarterly revenue of $5.6 billion.

• Completion and Production: This is the larger segment, bringing in $3.2 billion in Q3 2025. It focuses on services like cementing, stimulation (fracking), and completion tools.
• Drilling and Evaluation: This segment, which includes drilling, wireline, and well construction services, generated $2.4 billion in Q3 2025.

Here's the quick math on segment contribution for Q3 2025: Completion and Production accounted for about 57% of total revenue, while Drilling and Evaluation made up the remaining 43%. This split is defintely typical for a company with a strong position in unconventional resource development, which relies heavily on completion services.

Geographic Shifts and Growth Dynamics

The real story in 2025 isn't just the overall number; it's the geographic mix. While the total trailing twelve months revenue declined by -4.06% year-over-year, the sequential quarterly performance shows a clear divergence between the domestic and international markets. North America is struggling, but the international business is showing resilience, even growth in some regions.

For Q3 2025, North American revenue was strong sequentially, up 5% from the prior quarter to $2.4 billion. This was driven by increased stimulation activity in US Land and Canada. But to be fair, the first quarter of 2025 saw a steep year-over-year decline in North America of 12%.

The international business, however, is a patchwork of risks and opportunities. Overall, international revenue was flat sequentially in Q3 2025, but the regional data shows movement.

What this estimate hides is the strategic shift. The Q3 decline in the Middle East/Asia, driven by lower activity in Saudi Arabia, is a near-term risk you need to watch. Still, the sequential growth in Latin America and North America's late-year rebound suggests management is executing its strategy to prioritize returns and technology leadership, even with a shrinking top line overall. For a deeper dive into who is betting on this strategy, you should check out Exploring Halliburton Company (HAL) Investor Profile: Who's Buying and Why?

Profitability Metrics

You're looking for a clear picture of Halliburton Company's (HAL) financial engine, and the 2025 results show a story of strong core performance overshadowed by a necessary, but significant, one-time cleanup. The direct takeaway is this: Halliburton's operational efficiency, excluding non-cash charges, remains solid, with an Adjusted Operating Margin of 13% in Q3 2025, but its reported bottom-line profitability is under pressure from market softness and asset rationalization.

When you break down the numbers for the first nine months of 2025, the GAAP (Generally Accepted Accounting Principles) figures are telling. The cumulative revenue through Q3 2025 stands at approximately $16.5 billion. However, the reported net income for that same period is only about $694 million. Here's the quick math on the core margins:

• Gross Profit Margin: The Q3 2025 Gross Margin was 15.29%.
• Operating Profit Margin (GAAP): The nine-month GAAP Operating Margin is roughly 9.18%.
• Net Profit Margin (GAAP): The nine-month GAAP Net Profit Margin is approximately 4.21%.

The gross margin, which measures how efficiently the company turns revenue into gross profit before overhead, is the first signal of cost pressure. Halliburton's TTM (Trailing Twelve Months) Gross Profit ending September 30, 2025, declined by a sharp 18.78% year-over-year, reflecting pricing concessions, especially in North America, and lower activity levels.

Operational Efficiency and Margin Trends

The real story of operational efficiency lies in the distinction between reported and adjusted figures. In Q3 2025, Halliburton's reported Operating Margin was just 6%, with net income at only $18 million. But this was due to a massive, non-cash charge of $540 million for 'Impairments and other charges,' which included asset writedowns and an investment loss in Argentina.

To be fair, the company's underlying performance, measured by its Adjusted Operating Margin, was much stronger at 13% in Q3 2025. That's a good number, and it shows the core business is working. Management is a trend-aware realist, too, announcing steps to deliver estimated savings of $100 million per quarter, plus idling equipment that no longer meets their return expectations. This focus on capital discipline and cost management is defintely a clear action to protect future margins.

Peer Comparison: Where HAL Stands

When you look at the oilfield services sector, Halliburton's profitability ratios generally lag its largest peer, which is a key risk to monitor. For instance, the Q3 2025 Gross Margin of 15.29% is noticeably lower than the 2024 Gross Margin of its main competitor, Schlumberger, which was 20.68%.

The market consensus is that Halliburton's net margin is below industry standards, though analysts project it to rebound to around 8.4% in the near term as the one-time charges fade and cost controls take effect. The company's strategic pivot to international markets and high-tech offerings, like its Zeus IQ autonomous fracturing system, is the long-term play to lift these margins, moving away from commoditized services. You can read more about their strategic direction here: Mission Statement, Vision, & Core Values of Halliburton Company (HAL).

What this comparison hides is that Halliburton has a higher exposure to the volatile North American market, which has seen lower activity and pricing pressure in 2025, directly impacting its gross margin compared to more internationally focused rivals [cite: 3 in previous step].

Debt vs. Equity Structure

You're looking at Halliburton Company (HAL) and asking the right question: how is this capital-intensive business actually funding its growth? The short answer is that Halliburton Company is leaning more on equity than debt, but its leverage is still higher than the industry benchmark, which is a key point for any realist investor.

As of the third quarter of $\mathbf{2025}$, Halliburton Company's total debt sits at approximately $\mathbf{\$8.567 \text{ billion}}$. Here's the quick math: that breaks down into roughly $\mathbf{\$676 \text{ million}}$ in short-term debt and capital lease obligations, plus $\mathbf{\$7.891 \text{ billion}}$ in long-term debt and capital lease obligations. This long-term debt figure represents a positive trend, showing a $\mathbf{6.31\%}$ decline year-over-year as of September $\mathbf{2025}$. They are defintely focused on deleveraging.

Leverage: HAL vs. The Oilfield Services Industry

The Debt-to-Equity (D/E) ratio is your clearest measure of financial leverage-how much of the company is funded by creditors versus shareholders. For Halliburton Company, the D/E ratio as of September $\mathbf{2025}$ was approximately $\mathbf{0.84}$. This means the company has $\mathbf{84}$ cents of debt for every dollar of shareholder equity, which totaled $\mathbf{\$10.203 \text{ billion}}$ in the same period. A ratio below 1.0 is generally considered healthy, showing equity is the primary funding source.

However, you need context. The average D/E ratio for the 'Oil and gas equipment and services' industry is much lower, sitting around $\mathbf{0.52}$. Halliburton Company's $\mathbf{0.84}$ is higher, which signals a more aggressive, or at least more capital-reliant, approach to financing its operations compared to its peers. This higher leverage is a trade-off for the growth and scale Halliburton Company pursues, especially in complex international markets. You must weigh the higher risk against the potential for amplified returns.

• HAL's D/E ratio is $\mathbf{0.84}$.
• Industry average D/E is $\mathbf{0.52}$.
• Higher D/E suggests more capital-intensive operations.

Debt Management and Credit Signals

Halliburton Company's debt strategy is less about new issuance in $\mathbf{2025}$ and more about optimization and shareholder returns. The company is currently rated 'BBB+' by S&P Global Ratings, which is an investment-grade rating, confirming its ability to meet its financial commitments. In July $\mathbf{2025}$, S&P revised the outlook to Stable from Positive, which reflects a temporary slowdown in North American drilling and completion activity that is pressuring credit measures in the near-term. This is a realist check on the macro environment.

The company is actively managing its capital structure through the equity side, too. In both the first and third quarters of $\mathbf{2025}$, Halliburton Company repurchased approximately $\mathbf{\$250 \text{ million}}$ of its common stock. This move signals confidence in future cash flow and a commitment to returning capital to shareholders, effectively reducing the equity base while maintaining a manageable debt load. They are using operating cash flow to pay down debt and buy back shares, not relying on new debt for growth. For a deeper look at what drives these strategic decisions, you should review the Mission Statement, Vision, & Core Values of Halliburton Company (HAL).

The next concrete step for you is to monitor Halliburton Company's free cash flow (FCF) generation over the next two quarters. If FCF continues to be robust, it will support the Stable outlook and allow for further debt reduction or increased shareholder returns, mitigating the risk implied by the higher-than-average D/E ratio.

Liquidity and Solvency

Halliburton Company (HAL) shows a solid liquidity position, meaning the company has enough short-term assets to cover its short-term debts. For the third quarter of 2025, the key metrics confirm a healthy financial cushion, which is defintely a strength in the cyclical energy sector.

You can see this strength in the current and quick ratios, which are essential gauges of immediate financial health. Here's the quick math for the end of Q3 2025, which is the most recent data we have:

• Current Ratio: At 1.96, this ratio (Current Assets / Current Liabilities) is nearly double the standard 1.0 benchmark, showing Halliburton Company has $1.96 in current assets for every dollar of current liabilities.
• Quick Ratio: The Quick Ratio (or Acid-Test Ratio), which strips out inventory, stands at 1.43. This is still well above the conservative 1.0 threshold, indicating the company's highly liquid assets (like cash and receivables) alone are more than sufficient to cover all its immediate obligations.

This is a clear sign of operational efficiency and excellent working capital management.

Working Capital and Cash Flow Trends

The company's working capital-the difference between current assets and current liabilities-is substantial. As of September 30, 2025, Halliburton Company maintained a positive working capital of $5.69 billion (Current Assets of $11.64 billion minus Current Liabilities of $5.95 billion). This significant buffer allows them to fund day-to-day operations and withstand minor market shocks without needing external financing. A large, positive working capital is a mark of a well-managed balance sheet in a capital-intensive industry.

Looking at the cash flow statement for Q3 2025 provides a deeper look into where the cash is actually coming from and going. Cash is king, so we always look at the source and use of funds.

The $488 million in operating cash flow for Q3 2025 is the real story here; it shows the core business is a powerful cash engine. Plus, after accounting for capital expenditures of $261 million, the resulting free cash flow of $276 million is robust. This FCF is what management uses for shareholder returns, like the approximately $250 million in stock repurchases executed in the same quarter. This is a very clear, positive cycle: generate cash, invest in the business, and return the excess to shareholders.

Liquidity Strengths and Near-Term Actions

Halliburton Company's liquidity is a significant strength, not a concern. The high Current and Quick Ratios, coupled with consistently positive and substantial cash flow from operations, mean the company is well-positioned to handle its short-term obligations, fund its growth, and continue its capital return program. The near-term risk of a liquidity crunch is extremely low.

For you, the investor or strategist, the action is clear: monitor the consistency of this cash flow, especially the free cash flow, as it's the fuel for their shareholder-friendly policies. Look for any changes in the cash flow from operations (CFO) in the next quarter's report. For a deeper dive into the company's overall health, check out Breaking Down Halliburton Company (HAL) Financial Health: Key Insights for Investors.

Valuation Analysis

You're looking at Halliburton Company (HAL) and asking the core question: is it a bargain, or is the market right to be cautious? Based on the latest fiscal year data through November 2025, the consensus suggests Halliburton Company is a 'Buy,' but the valuation multiples tell a more nuanced story about where its oilfield services business stands right now.

The stock has definitely been on a rough ride, with the price declining a notable 19.34% over the last 12 months. This reflects the volatility in the energy services sector. The stock is trading near its 52-week low of $18.72, with the latest close around $25.82, significantly below its 52-week high of $32.57. That's a big swing.

Is Halliburton Company (HAL) Overvalued or Undervalued?

The market is sending mixed signals. Analysts, on average, see meaningful upside, but the trailing valuation ratios suggest the stock is priced in line with or slightly above its peers, not deeply discounted. The analyst consensus is a clear 'Buy' rating, with an average price target of $34.33. That implies a substantial upside from the current price, which is why the 'Buy' rating holds.

Here's the quick math on the key valuation multiples (ratios that compare a company's stock price to its financial performance):

• Price-to-Earnings (P/E) (Trailing Twelve Months): 17.63
• Price-to-Book (P/B): 2.3
• Enterprise Value-to-EBITDA (EV/EBITDA): 6.62

The trailing P/E of 17.63 is higher than the five-year average of 16.2, suggesting the stock isn't cheap based on past earnings. But, to be fair, the forward P/E (based on 2025 earnings estimates) drops to a much more attractive 11.49, which is a defintely a sign of anticipated earnings growth. The EV/EBITDA of 6.62 is a healthy number for a capital-intensive business like oilfield services, indicating the enterprise value is reasonable compared to its operating cash flow proxy (EBITDA).

Dividend Health and Stock Trend

For income-focused investors, Halliburton Company's dividend profile is solid and sustainable. The annual dividend per share is $0.68, translating to a dividend yield of 2.65% at the current price. The payout ratio-the percentage of earnings paid out as dividends-is a comfortable 44.7%. This low payout ratio means the dividend is well-covered by earnings, giving the company plenty of room to reinvest in the business or weather a downturn.

The stock's recent performance has been challenging, but it's important to look at the longer-term context. While the last 12 months show a decline, the 52-week range of $18.72 to $32.57 shows the potential for significant price recovery if the market re-rates the stock closer to the analyst target. The market is currently pricing in near-term weakness, but the analyst view is banking on a stronger execution of the company's long-term strategy. You can review the strategic direction in detail here: Mission Statement, Vision, & Core Values of Halliburton Company (HAL).

The table below summarizes the key valuation metrics for a quick comparison:

Your action here is to check your investment thesis against the forward P/E of 11.49; if you believe Halliburton Company can hit those 2025 earnings estimates, the stock is undervalued.

Risk Factors

You're seeing Halliburton Company (HAL) post solid adjusted earnings, but the headline net income number is a red flag that screams of underlying, near-term risks. The company's financial health is strong, still, you can't ignore the $392 million in impairments and other charges they took in the third quarter of 2025 (Q3 2025). That's a real cash hit, not just an accounting trick.

The core risk is a persistent weakness in North American activity combined with volatile global markets. For a seasoned oilfield services giant, the biggest threats come from external forces they can't fully control, but their mitigation plan is clear. They are focused on what they can control: cost and capital discipline.

Here's a look at the most pressing risks impacting Halliburton Company (HAL) right now, grounded in their Q3 2025 filings:

• Commodity and Market Volatility: Global oil and gas prices dictate customer spending. OPEC+ production cuts and trade uncertainties continue to create a volatile market, putting economic returns pressure on equipment utilization.
• North American Slowdown: The North American market, historically a stronghold, remains challenging. Halliburton Company (HAL)'s North American revenue declined by 12% year-over-year in Q1 2025 and 9% in Q2 2025, primarily due to softer pricing and reduced stimulation activity.
• Geopolitical and Regulatory Headwinds: Operating in over 70 countries means exposure to significant geopolitical risks, including tensions in the Middle East and the ongoing Russia-Ukraine conflict. Plus, trade tariffs are a direct cost, expected to impact second-quarter profits by 2-3¢ per share.

The $392 million in Q3 2025 impairments and other charges is the most concrete financial risk indicator in the recent reports. This exceptional charge, which dropped reported net income to only $18 million for the quarter (compared to an adjusted net income of $496 million), signals a strategic decision to right-size the business. It's a one-time pain to achieve long-term gain, but it highlights underperforming assets and the need for significant operational adjustments.

The operational and financial risks are tightly linked to the cycle. When activity slows, the company must deal with inflationary cost increases for raw materials, like chemicals and cement, and extended supply chain lead times (operational challenges). Halliburton Company (HAL) is defintely a cyclical stock. You need to watch their Mission Statement, Vision, & Core Values of Halliburton Company (HAL) to understand their long-term pivot.

Mitigation and Strategic Action

Management is not sitting still. They've announced clear, aggressive actions to mitigate these risks and protect their adjusted operating margin of 13%.

The shift toward Carbon Capture and Storage (CCS) and low-carbon solutions is a strategic diversification play, reducing long-term reliance on traditional oilfield revenues. This is a smart move to address the energy transition risk, but the financial impact is still small in the near-term. The next step is to see if they can execute on the $100 million in quarterly cost savings while maintaining their international growth momentum.

Growth Opportunities

You're looking at Halliburton Company (HAL) and trying to figure out where the next decade of growth comes from, especially with the North American market showing some caution. The direct takeaway is this: Halliburton is executing a calculated pivot, leveraging its core subsurface expertise to capture high-margin revenue in the energy transition while maintaining its technology lead in traditional oil and gas. They are not abandoning their strengths; they are redeploying them.

The company's strategic shift is defintely the biggest story of 2025. They are moving from a pure-play oilfield service provider to a diversified energy engineering firm. This is a smart way to manage the long-term risk of market volatility. Their Q3 2025 revenue came in at a strong $5.6 billion, beating analyst expectations, but the real upside is in the new markets they are entering.

Here's the quick math on their growth drivers:

• Energy Transition: Halliburton is using its drilling and completions mastery for new, high-growth commodities. The June 2025 contract with GeoFrame Energy to design wells for a Direct Lithium Extraction (DLE) and geothermal project in East Texas is a concrete example.
• Digitalization & AI: Their AI platforms, like DS365.ai, are not just buzzwords; they are driving efficiency. This focus on digital oilfield technology is a competitive advantage, helping producers lower development costs.
• Cost Discipline: Management is forecasting a substantial $400 million in annual savings from cost-cutting, with $100 million expected per quarter. This operational efficiency directly boosts the bottom line, even if top-line growth is slow.

The company's revenue growth is forecast to be modest at about 1% per annum, but the earnings per share (EPS) growth is projected to be much stronger, at about 21.1% per annum over the next few years. This suggests a powerful combination of cost control and higher-margin international and new-energy work.

Competitive Technology and International Focus

Halliburton's competitive advantage remains rooted in its technology and global footprint. They are the market leader in North American hydraulic fracturing and completions, a segment that accounts for nearly half their revenue. Their proprietary Zeus electric fracturing platform is a key differentiator, with over half of their active North America fleet being Zeus-powered as of Q3 2025. That's a significant technology lead.

Their international strategy is also a critical buffer against North American market volatility. International revenue was $3.2 billion in Q1 2025, and the company is actively expanding its directional drilling and unconventional resources businesses globally. They are also a key player in the Carbon Capture and Storage (CCS) market, securing a contract with the Northern Endurance Partnership (NEP) in the UK North Sea for CCS monitoring and well completions.

To give you a better picture of the segment performance in 2025, here is a look at the sequential growth for Q3:

What this estimate hides is the potential for a significant re-rating if their energy transition ventures-lithium, geothermal, and hydrogen storage-scale faster than expected. Their core mission and values, which you can read here: Mission Statement, Vision, & Core Values of Halliburton Company (HAL)., show a clear commitment to technology and efficiency, which are the real drivers of their future growth. For the full year 2025, the trailing twelve months revenue stands at approximately $22.14 billion.

Next Step: Portfolio Managers should model a higher multiple on the non-traditional revenue streams to capture the full valuation upside of the energy transition pivot.