Oil prices trended lower this week on fears that it might take the Federal Reserve longer to tame inflation and that continued rate hikes might push the economy into a recession. That said, the reopening of the economy in China, the world’s largest crude oil importer, is expected to support demand and prices this year. Keeping in mind the ongoing uncertainty, we used TipRanks’ Stock Comparison Tool to place Exxon (NYSE:XOM), SLB (NYSE:SLB), and Halliburton (NYSE:HAL) against each other to pick the most attractive energy stock as per Wall Street analysts.
Exxon Mobil (NYSE:XOM)
Oil and gas giant Exxon Mobil (NYSE:XOM) delivered stellar results in 2022 as the Russia-Ukraine war triggered a spike in energy prices. The company’s adjusted earnings per share (EPS) surged over 161% to $14.06 in 2022, driven by 45% rise in revenue to $413.7 billion and solid refining margins. The company also streamlined costs to improve profitability. It achieved an additional $2 billion of cost savings in 2022 and is on track to deliver $9 billion of total annual savings in 2023 compared to 2019.
Remarkably, Exxon’s free cash flow increased nearly 64% to $62 billion in 2022. Robust cash flows helped the company distribute $29.8 billion to shareholders through dividends and share repurchases. The company repaid $7 billion in debt last year. Overall, Exxon is well-positioned to grow in the years ahead.
What is the Prediction for Exxon Stock?
Argus analyst Bill Selesky increased the price target for Exxon to $133 from $128 and maintained a Buy rating after the company reported higher Q4 2022 earnings due to a rise in realized crude oil and natural gas prices and increased production. Despite the impressive run in XOM stock last year, Selesky sees a long runway ahead based on strong energy market fundamentals.
Wall Street is cautiously optimistic about Exxon, with a Moderate Buy consensus rating based on 10 Buys, seven Holds, and one Sell. At $125.47, the average XOM price target implies nearly 13% upside potential from current levels. Shares are flat on a year-to-date basis but have risen over 42% in the past 52 weeks.
SLB (NYSE:SLB)
SLB (NYSE:SLB), formerly called Schlumberger, is a leading oilfield services company that provides the equipment, services, and technology required for production, drilling, and processing to the oil and gas industry. Tight supply due to the Russia-Ukraine war and high energy prices made oil and gas giants boost their capital spending to increase production, thus driving demand for SLB’s drilling services and equipment. SLB’s revenue increased 23% to $28.1 billion in 2022. Furthermore, adjusted EPS surged 70% to $2.18.
SLB’s free cash flow declined to $1.42 billion in 2022 from nearly $3 billion in the previous year due to higher capital spending to support “new international and offshore project mobilizations” and lower-than-expected year-end accounts receivable collections. Nevertheless, the company increased its quarterly dividend per share by 43% to $0.25 and resumed its share buyback program in January.
SLB expects continued momentum in activity as well as higher pricing due to tight equipment and service capacity in certain markets to drive strong results in 2023. It believes that energy security will fuel continued investments in capacity expansion. The company also expects to benefit from an increased focus on low-carbon energy sources.
Is SLB a Buy, Sell, or Hold?
Following the Q4 print, Citigroup analyst Scott Gruber stated that “Multiple tailwinds remain in place” for SLB in 2023. Gruber highlighted that the activity outlook for the international markets remains impressive, especially in the Middle East where SLB expects record investments by companies for several years.
Wall Street is bullish about SLB, with a Moderate Buy consensus rating backed by 12 Buys and one Hold. The average SLB stock price target of $67.17 implies 26% upside. Shares are essentially flat compared to the start of 2023 and have advanced about 30% over the past year.
Halliburton (NYSE:HAL)
Like Schlumberger, oil field services company Halliburton (NYSE:HAL) also benefited from a favorable energy market last year. The company’s revenue increased nearly 33% to $20.3 billion in 2022, while adjusted EPS surged 99% to $2.15. Free cash flow rose 4.5% to $1.43 billion. Strong cash flows helped the company announce a 33% hike in its quarterly dividend to $0.16 per share beginning the first quarter of 2023.
Halliburton is confident about delivering solid performance in 2023 as it believes that tight oil and gas supply and China’s reopening would drive demand for oilfield services. Particularly, the company expects strong activity in North America and projects customer spending to increase by at least 15% in 2023. Additionally, Halliburton expects at least mid-teens growth in international activity, with most of the growth coming from the Middle East and Latin America.
Is HAL Stock a Good Buy?
Following the Q4 2022 results, HSBC analyst Abhishek Kumar increased his price target for Halliburton to $57 from $43.90 and maintained a Buy rating. Kumar noted that the company issued a robust 2023 guidance, with growth expected across the domestic and international markets.
Overall, Halliburton earns the Street’s Strong Buy consensus rating based on an impressive 15 unanimous Buys. The average HAL stock price target of $50.17 suggests 37.5% upside potential. Shares are down over 7% year-to-date but have risen 11% over the past 52 weeks.
Conclusion
Energy prices are expected to be volatile this year amid the Russia-Ukraine war, China’s reopening, and other supply-demand dynamics. Wall Street is currently more bullish about oilfield services companies SLB and Halliburton than Exxon and sees higher upside potential in HAL than the other two stocks.
As per TipRanks Smart Score System, HAL earns eight out of 10, implying it is capable of outperforming the broader market over the long term.