With the fourth quarter’s earning season in full swing now, investors have, for the most part, been pleasantly surprised. Though many companies have exceeded expectations, earnings estimates for several commodity producers remain rather bearish as global economic uncertainties and demand concerns have left many understandably leery. Last week, leading oil and gas equipment and services provider Schlumberger (SLB) missed analysts’ estimates, reporting fourth quarter net earnings that fell an abysmal 3.7%. Aluminum giant Alcoa (AA), however, reported revenues well above expectations, and the company predicts aluminum demand growth to rise in 2013–-a crucial and positive indicator for the global economy. This Friday, investors will shift their focus to two major commodity producers; Weyerhaeuser (WY) and Halliburton (HAL) [for more commodity news and analysis subscribe to our free newsletter].
Analysts have become rather bullish on this leading timber company, increasing earnings estimates by 14 cents over the past three months and by 43% within the last year. Revenue is projected to jump 11.5% to $1.8 billion for the quarter. For the past two consecutive quarters, Weyerhaeuser has posted increasing revenues; 12.9% in the third quarter and 11.4% in the second.
And with recent economic data showing positive signs in the housing market, analysts continue to regard the stock as a solid buy. Investors should, however, be conscious of the short-term impacts Superstorm Sandy had on the company as well as the broader industry.
Halliburton (HAL): Lower Earnings, But Still Optimism
Following chief rival Schlumberger’s disappointing earnings report last week, investors may not be feeling too optimistic about this oilfields services company. Analysts are expecting Halliburton to announce decreased profits this Friday and estimate earnings to come in at 61 cents per share, a 39% drop from less than a year ago. Revenues are projected to fall 0.1% year-over-year to $7.06 billion for the quarter. For the last two consecutive quarters, Halliburton has reported decreasing income; an 11.9% drop in the third quarter and a 0.3% decline in the second.
Despite the somewhat gloomy outlook, the majority of analysts still rate this stock as a buy. The majority of Halliburton’s revenues comes from domestic operations, but the company has expressed its desire to expand its footprint into the international market. Should the company be successful, holders of Halliburton stock may be positioned for a nice uptick in the long run.
Disclosure: No positions at time of writing.