Halliburton Co. (NYSE:HAL)

The analysis of the quarterly financial ratios over the observed period reveals significant fluctuations in the company's profitability and leverage metrics.

Return on Assets (ROA)

The ROA demonstrated a declining trend from early 2015 into 2016, with values moving from a positive 7.31% in the first quarter of 2015 to deeply negative figures around -21% by the end of 2016. This indicates deteriorating asset efficiency during this period. Thereafter, the ROA showed gradual recovery throughout 2017 and 2018, transitioning from negative or near-zero values toward a positive 6.37% by the last quarter of 2018, signaling an improvement in the utilization of company assets to generate earnings.

Financial Leverage

Financial leverage ratios showed a steady upward trend initially, rising from about 1.96 in early 2015 to a peak near 3.01 by the end of 2017 and early 2018, reflecting an increasing reliance on debt or other liabilities relative to equity. However, the leverage ratio slightly moderated during the remainder of 2018, decreasing to around 2.73 by the final quarter. This pattern suggests a cautious approach to reducing leverage after reaching relatively high levels.

Return on Equity (ROE)

The ROE closely mirrors the ROA trend but with more pronounced swings, reflecting the impact of leverage on equity returns. Starting from a healthy 14.34% in early 2015, ROE sharply declined through 2016 to deeply negative values exceeding -60%, indicative of substantial losses or negative net income relative to shareholder equity. The recovery from this low point began towards the end of 2017 and continued through 2018, with ROE returning to positive territory and reaching a notably strong 17.39% by the end of 2018. This rebound highlights improved profitability and effective management of equity capital.

Overall, the data suggests that the company experienced a pronounced downturn in financial performance around 2015-2016, characterized by reduced asset profitability and increased leverage. The subsequent recovery phase through 2017 and 2018 shows enhanced profitability and a partial retrenchment of financial leverage, indicating potential strategic adjustments and an improving financial position.

The analysis of the financial ratios over the observed periods reveals several notable trends in the company's performance and financial health.

Net Profit Margin

The net profit margin demonstrates considerable volatility and overall weakness during the timeframe. It starts at a positive 6.86% and declines steadily, turning negative from December 2015 through December 2017, with the lowest points around -36.27% by the end of 2016. From early 2018 onwards, there is a gradual recovery, culminating in a positive margin of 6.9% by the last quarter observed. This suggests a challenging period of decreased profitability followed by signs of operational improvement.

Asset Turnover

Asset turnover declines from 1.06 in early 2015 to a low near 0.59 at the end of 2016, indicating reduced efficiency in utilizing assets to generate sales. Subsequently, there is a steady improvement through 2017 and 2018, reaching approximately 0.92 by the final quarter. This recovery suggests enhanced revenue generation relative to asset base over the latter periods.

Financial Leverage

Financial leverage steadily increases throughout 2015 and 2016, moving from roughly 1.96 to a peak above 3.0 in late 2017 and early 2018. This indicates progressively higher use of debt relative to equity in the company’s capital structure. Toward the end of the observed period, leverage slightly declines to around 2.73 but remains elevated. Elevated leverage may expose the company to higher financial risk.

Return on Equity (ROE)

ROE shows a pattern consistent with the net profit margin, beginning at a strong 14.34% in early 2015, followed by a sharp decline and negative returns through most of 2016 and 2017, reaching deeply negative levels below -60% around late 2016. The trend turns positive again in 2018, ending at 17.39%, indicative of significant recovery in generating returns for shareholders after a prolonged period of losses.

Overall, the financial data reflect a recent history marked by substantial profitability and efficiency challenges, likely exacerbated by increased financial leverage. The most recent quarters show meaningful progress in profitability, asset utilization, and shareholder returns, suggesting a potentially positive shift in company performance.

The analysis of the quarterly financial performance over the observed periods reveals significant fluctuations and some recovery patterns in key financial ratios and margins.

Tax Burden

The tax burden ratio initially showed moderate stability around 0.7 in early 2015 but data gaps limit full trend observation until 2017 and 2018, where sharp variability is evident, with values swinging from negative to positive. The ratio improves considerably toward the end of 2018, reaching 0.91, suggesting a return to a more typical effective tax rate relative to pre-tax income.

Interest Burden

The interest burden started relatively high, above 0.8 in early 2015, indicating manageable interest expenses relative to EBIT. A decline followed, reaching a notably negative value in mid-2017, which likely indicates either losses before interest or changes in interest expense recognition. The ratio recovers steadily after this trough, settling around 0.75 by the end of 2018, pointing to improved operational earnings before interest impact.

EBIT Margin

Operating margins deteriorated sharply starting in late 2015, plunging into negative territory and reaching the lowest points between mid-2016 and the end of 2016, with margins as low as approximately -44%. This period reflects significant operational difficulties. However, from early 2017 onwards, there is a persistent recovery trend, moving back into positive margins by mid-2017 and gradually improving to over 10% by the last quarter of 2018, signaling enhanced profitability and operational efficiency.

Asset Turnover

Asset turnover steadily decreased from early 2015 through 2016, dropping from above 1.0 to around 0.59, indicating less efficient use of assets in generating revenue. A reversal occurs starting in 2017, with a clear upward trajectory in asset turnover, improving to approximately 0.92 by the end of 2018, thus reflecting renewed efficiency in asset utilization concurrent with margin improvements.

Financial Leverage

Financial leverage shows a progressive increase from early 2015 to the end of 2017, peaking above 3.0. This suggests rising debt levels or a higher ratio of total assets to equity, increasing financial risk. Notably, in 2018 leverage declines gradually towards 2.73, indicating a partial deleveraging or equity growth phase, which could support enhanced financial stability.

Return on Equity (ROE)

ROE exhibits significant volatility aligned with operational performance and leverage trends. After a positive start of above 14% in early 2015, it plummeted sharply into deep negative territory through 2016 (-61.25% at worst), consistent with operational losses and high leverage. A partial recovery emerges in 2017 with fluctuations around breakeven, culminating in a strong resurgence in the last quarter of 2018 to approximately 17.4%, indicating successful turnaround efforts and restoration of shareholder value.

Overall, the data reflects a severe operational and financial downturn during 2015–2016, followed by a protracted recovery phase through 2017 and 2018. Improvements in EBIT margins, asset turnover, and ROE in the later periods highlight enhanced profitability and operational efficiency. The reduction in financial leverage toward the end of the period supports a strengthened financial position, contributing to the improved returns to equity holders.

The analysis of the quarterly financial metrics reveals distinct patterns and shifts over the observed periods. The data covers three key performance indicators: Net Profit Margin, Asset Turnover, and Return on Assets (ROA), from the first quarter of 2015 through the last quarter of 2018.

Net Profit Margin

The Net Profit Margin exhibited a declining trend beginning in early 2015, dropping from a positive 6.86% in March 2015 to a deep negative margin peaking around -36.27% by December 2016. This substantial decrease indicates that the company experienced considerable losses, with profitability severely impaired over this period. From early 2017, a gradual recovery trend is visible, with fluctuations leading to improved margins, culminating in a positive 6.9% by the end of 2018. This suggests a turnaround in the ability to convert revenue into profit.

Asset Turnover

Asset Turnover ratios started at 1.06 in March 2015 and progressively decreased until the end of 2016, bottoming around 0.59. This decline implies reduced efficiency in utilizing assets to generate sales. From 2017 onwards, Asset Turnover improved steadily, reaching approximately 0.92 by the last quarter of 2018, reflecting enhanced asset utilization during this recovery phase.

Return on Assets (ROA)

ROA mirrored the pattern observed with Net Profit Margin, beginning at 7.31% in early 2015, severely declining to a negative trough of about -21.34% by the end of 2016. This suggests that asset use was not generating positive returns during this difficult period. As the company’s operational performance improved post-2016, ROA rebounded, ending at a strong 6.37% by December 2018, reflecting a return to profitability and better asset management.

Overall, the data indicates a period of operational and financial distress culminating at the end of 2016, evidenced by sharp declines in profitability and asset efficiency. However, subsequent quarters show a clear recovery trajectory with improvements in profitability, asset turnover, and returns, culminating in a return to positive margins and asset returns by the end of 2018. This suggests successful strategic or operational adjustments leading to improved financial health.

Tax Burden

The tax burden ratio exhibited a declining trend during the first three quarters, dropping from 0.74 to 0.67. Data is missing for several periods thereafter, but beginning in the first quarter of 2017, the ratio fluctuates significantly, including negative values in mid to late 2017, before rising sharply to 0.91 by the end of 2018. This volatility indicates variability in tax expenses relative to pre-tax income during later periods.

Interest Burden

Initially, the interest burden ratio decreased from 0.88 to 0.48 within 2015, suggesting an increase in interest expenses relative to earnings. After missing data for several quarters, more consistent figures appear from early 2017 onward, showing a rise from negative values back into positive territory, gradually increasing and stabilizing around 0.75 by the end of 2018. This pattern reflects fluctuating interest costs impacting profitability, with improvement in recent periods.

EBIT Margin

The EBIT margin showed a deteriorating movement throughout 2015 and 2016, plunging from a positive 10.59% in early 2015 to a low near -43.58% by the end of 2016. In 2017 and onward, there is a gradual recovery, with margins moving back into positive territory and steadily improving up to approximately 10.05% by the end of 2018. This indicates significant operational challenges followed by a robust recuperation in earnings before interest and taxes.

Asset Turnover

Asset turnover declined from 1.06 to 0.59 between early 2015 and late 2016, signalling a reduction in how effectively the company utilized its assets to generate revenue. From 2017 forward, asset turnover improved consistently, moving from 0.64 up to a high of about 0.93 near the end of 2018. This trend suggests enhanced efficiency in asset use over the latter periods.

Return on Assets (ROA)

ROA mirrored the pattern seen in EBIT margin, starting at 7.31% in early 2015 and falling steadily to deep negative values near -21.34% by the end of 2016, indicating losses relative to assets. Recovery began in 2017, with ROA fluctuating but trending upward, culminating in positive growth reaching 6.37% by the close of 2018. This recovery reflects improving overall profitability from asset investments after a period of financial strain.

Tax Burden Ratio

The tax burden ratio showed a generally positive trend during the early periods, starting from 0.74 in the first quarter of 2015 and declining slightly to 0.67 in the third quarter of 2015. Data gaps follow for several quarters, making continuous trend analysis difficult. However, towards the later periods starting in late 2017, the ratio shows significant volatility, including negative values such as -0.69 and -0.42 before recovering to positive levels near 0.91 by the end of 2018. This volatility may indicate tax-related impairments or adjustments during those quarters.

Interest Burden Ratio

This ratio decreased notably from 0.88 in the first quarter of 2015 to a low of 0.48 in the third quarter of 2015, implying increasing interest expenses or financial leverage impacts during that period. While data is missing for several quarters afterward, the trend towards the last year of the dataset shows a recovery and stabilization, reaching about 0.75 by the final quarter of 2018 after some fluctuations including a negative value in early 2017, which may hint at extraordinary financial costs or accounting treatments during that time.

EBIT Margin

The EBIT margin experienced a pronounced decline from 10.59% in early 2015 to negative territory by the end of the year, indicating deteriorating operating profitability. The downward trend intensified throughout 2016, bottoming near -43.58%. Starting in 2017, the EBIT margin gradually improved, moving back into positive territory by mid-2017 and steadily increasing to 10.05% by the end of 2018. This recovery phase reflects an operational turnaround or improved cost management and revenue enhancement over the latter periods.

Net Profit Margin

Similarly, net profit margin mirrored the EBIT margin trend, declining from 6.86% in early 2015 to negative values deepening to -36.27% by late 2016. The margin showed signs of recovery starting in early 2017 but remained volatile, with intermittent negative quarters. By late 2018, the net profit margin rebounded sharply to 6.9%, indicating a resumption of profitability possibly driven by improved operational results and better cost control.