Halliburton (NYSE:HAL) shareholders are still up 178% over 3 years despite pulling back 5.0% in the past week
The most you can lose on any stock (assuming you don’t use leverage) is 100% of your money. But if you buy shares in a really great company, you can more than double your money. For example, the Halliburton Company (NYSE:HAL) share price has soared 167% in the last three years. How nice for those who held the stock! Then again, the 8.0% share price decline hasn’t been so fun for shareholders. This could be related to the soft market, with stocks down around 0.02% in the last month.
While this past week has detracted from the company’s three-year return, let’s look at the recent trends of the underlying business and see if the gains have been in alignment.
See our latest analysis for Halliburton
To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it’s a weighing machine. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.
During three years of share price growth, Halliburton moved from a loss to profitability. Given the importance of this milestone, it’s not overly surprising that the share price has increased strongly.
The company’s earnings per share (over time) is depicted in the image below (click to see the exact numbers).
We know that Halliburton has improved its bottom line over the last three years, but what does the future have in store? This free interactive report on Halliburton’s balance sheet strength is a great place to start, if you want to investigate the stock further.
What About Dividends?
It is important to consider the total shareholder return, as well as the share price return, for any given stock. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. In the case of Halliburton, it has a TSR of 178% for the last 3 years. That exceeds its share price return that we previously mentioned. The dividends paid by the company have thusly boosted the total shareholder return.
A Different Perspective
Halliburton shareholders gained a total return of 0.5% during the year. But that return falls short of the market. If we look back over five years, the returns are even better, coming in at 5% per year for five years. Maybe the share price is just taking a breather while the business executes on its growth strategy. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Consider for instance, the ever-present spectre of investment risk. We’ve identified 2 warning signs with Halliburton , and understanding them should be part of your investment process.
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.