Can Schlumberger (SLB) Keep Its Earnings Streak Alive in Q2?

Schlumberger Limited SLB is slated to report second-quarter 2020 earnings on Jul 24, before the opening bell.  

In the last reported quarter, the leading oilfield service firm beat the Zacks Consensus Estimate, thanks to resilience in the company’s international business. Notably, as far as earnings surprises are concerned, the Houston, TX-based company is on a firm footing as it beat the Zacks Consensus Estimate in three of the past four quarters, the average surprise being 4.3%. This is depicted in the graph below:

Schlumberger Limited Price and EPS Surprise


Schlumberger Limited Price and EPS Surprise

Schlumberger Limited price-eps-surprise | Schlumberger Limited Quote

Trend in Estimate Revision

The Zacks Consensus Estimate of break-even earnings per share has witnessed five upward and one downward revision over the past 30 days. The estimated figure suggests a decline of 100% from the prior-year reported number.

Further, the Zacks Consensus Estimate for revenues of $5.5 billion indicates a 33.3% decline from the prior-year quarter.

What Does the Zacks Model Say

Our proven model predicts an earnings beat for Schlumberger this time around. The combination of a positive Earnings ESP  and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: Earnings ESP represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate. Schlumberger has an Earnings ESP of +68.56%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Schlumberger currently carries a Zacks Rank #3.

Factors to Consider

From April-end 2020, the price of West Texas Intermediate (WTI) crude improved more than 239% through the June quarter. The significant improvement was owing to the partial recovery in fuel demand since the strict lockdown measures to contain the spread of coronavirus were eased. The recovered commodity pricing scenario is likely to have supported oilfield service activities of Schlumberger, with operations across 120 countries, since oilfield service firms assist explorers and producers to efficiently drill oil wells.

In other words, with the considerable recovery in oil prices, the decline in monthly rig count narrowed down significantly in the June quarter. This signifies a partial recovery in upstream operations in the second quarter – a positive for the oilfield service business.

Other Stocks to Consider

Investors can also consider the following players from the energy space that also have the right combination of elements to post an earnings beat in the to-be-reported quarter:

Cabot Oil Gas Corporation COG has an Earnings ESP of +2.08% and is a Zacks #3 Ranked player. The company is scheduled to release second-quarter results after the closing bell on Jul 30. You can see the complete list of today’s Zacks #1 Rank stocks here.

Chevron Corporation CVX has an Earnings ESP of +7.57% and a Zacks Rank of 3. It is scheduled to report second-quarter results on Jul 31.

ConocoPhillips COP has an Earnings ESP of +8.80% and a Zacks Rank #3. The firm is scheduled to release earnings on Jul 30, before the opening bell.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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