After a disappointing performance in 2023, stocks in the energy sector are off to another rough start so far in 2024. With less than one month in the books, the S&P 500 Energy Sector SPDR (XLE), with more than $34 billion in assets under management (AUM), is down 2.8% on a year-to-date basis.

China, one of the world's largest consumers of energy, remains mired in an economic slowdown, and concerns about growth out of the mainland have contributed to softer energy demand forecasts. However, Chinese authorities are now looking to inject liquidity into the economy via a cut to the reserve requirement ratio for banks, which is expected to provide a stimulus equivalent to about $140 billion. Additionally, ongoing geopolitical tensions that are impacting global shipping routes could create an underpinning of support for crude futures (CLH24).

Against this backdrop, here's a closer look at one energy company that just posted a strong set of numbers for its latest quarter. In addition to being a favorite of income investors, this oil stock is also a top pick among analysts. Here's why. 

About Halliburton Company

Houston, TX-based Halliburton (HAL)is one of the world's largest providers of products and services to the energy industry. Founded in 1919, Halliburton is the second-largest oil services company globally, and is responsible for most of the world's largest fracking operations. It operates in over 80 countries with about 50,000 employees.

Commanding a market cap of $31.6 billion, Halliburton stock is down 7.8% over the past year.

So, what makes Halliburton a consensus “Buy” on Wall Street? Let's have a closer look.

Q4 Earnings Top Estimates

Earlier this week, Halliburton reported its results for the fiscal fourth quarter, which beat bottom-line expectations. The company posted a 2.8% yearly rise in quarterly revenues to $5.74 billion as both of its key segments, Completion and Production and Drilling and Evaluation, reported modest year-over-year growth. The top-line results fell narrowly short of forecasts for $5.79 billion.

Adjusted EPS for the quarter came in at $0.86, up 19.4% from the previous year and above the consensus estimate of $0.80. Halliburton's EPS has topped expectations in each of the past five quarters.

Cash flow from operating activities for the quarter came in at $1.4 billion, and the company closed the quarter with a cash balance of $2.03 billion, well above the $262 million balance of the current portion of debt.

Halliburton simultaneously raised its quarterly dividend to $0.17 per share, bumping the forward yield to 1.93%. The payout ratio is right around 20%, leaving plenty of room for continued dividend increases. 

What's Next for HAL Stock?

Looking ahead, analysts are expecting the company to report EPS growth of about 11% in the first quarter of fiscal year 2024, and 12.4% overall for the full year. At a price/earnings to growth ratio of 0.88, HAL is reasonably priced on this basis (the energy sector median is 1.57).

Halliburton is also taking steps to enhance its margins, such as its Zeus electric fleets, automation, and fracture diagnostics. 

More broadly, the company is also expected to benefit from record crude oil production. According to the EIA, U.S. crude oil production will reach 13.21 million barrels per day (b/d) in 2024 and more than 13.4 million b/d in 2025, both of which would be new records. With Halliburton positioned as the industry's leading services provider, the company is well-positioned to benefit from booming crude production. 

Analysts have an overall rating of “Strong Buy” for HAL stock, with a mean target price of $48.50. This denotes an upside potential of about 32% from current levels. Out of 19 analysts covering the stock, 16 have a “Strong Buy” rating, 2 have a “Moderate Buy” rating, and 1 has a “Hold” rating.