Schlumberger (SLB) Set to Beat Earnings Estimates? - Analyst Blog

A generic image of a pen on paper
Credit: Shutterstock photo

Leading oilfield services company, Schlumberger Limited ( SLB ) is set to report its third-quarter 2013 results on Oct 18. Let's see how things are shaping up prior to the announcement.

In the last quarter, the company's earnings of $1.15 per share increased 9.5% year over year from $1.05. The quarterly results were aided by the company's strong international exposure along with focus on execution and integration capabilities. Also, the results were ahead of the Zacks Consensus Estimate of $1.11.

Growth Factors this Past Quarter

In the second quarter, Schlumberger recorded total revenue of $11.18 billion up 8.1% from the year-earlier level of $10.34 billion and ahead of the Zacks Consensus Estimate of $11.11 billion.

Schlumberger's overall outlook for 2013 remains largely unchanged from its earlier projections. The company remains unperturbed despite the main economies including China, the U.S. and the Eurozone witnessing mixed fortunes in the second quarter. As a result both oil and gas prices also are following a sideways trend in pricing reflecting the mixed nature of the global economy.

Looking forward, Schlumberger's optimism on rising rig count and customer activity will likely lead to its increased international spending on exploration, higher production and stepped up activity in the U.S. Gulf of Mexico. The company also expects steady growth in key regions that include Sub-Sahara Africa, Russia, the Middle East, China and Australia.

The oilfield services behemoth believes that strong leverage to the deepwater segment will aid it performance over the coming years. While the company makes most of its money outside North America, it bears the brunt of industry-wide weakness in U.S. hydraulic fracturing services as well as softness in the land coiled-tubing business.

Earnings Whispers?

Our proven model conclusively shows that Schlumberger is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is the case here as you will see below.

Zacks ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +0.81%. This is because the Most Accurate estimate is at $1.25 while the Zacks Consensus Estimate currently stands at $1.24.

Zacks Rank: Schlumberger's Zacks Rank #2 (Buy) increases the predictive power of ESP because the Rank when combined with an ESP of +0.81% indicates the possibility of positive results. We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some companies you may want to consider as our model shows these have the right combination of elements to post an earnings beat this quarter.

Gulfmark Offshore Inc. ( GLF ), earnings ESP of +3.09% and a Zacks Rank #1 (Strong Buy).

Ocean Rig UDW Inc. ( ORIG ), earnings ESP of +100.00% and a Zacks Rank #1 (Strong Buy).

Stone Energy Corp. ( SGY ), earnings ESP of +6.76% and a Zacks Rank #1 (Strong Buy).

GULFMARK OFFSHR (GLF): Free Stock Analysis Report

OCEAN RIG UDW (ORIG): Free Stock Analysis Report

STONE ENERGY CP (SGY): Free Stock Analysis Report

SCHLUMBERGER LT (SLB): Free Stock Analysis Report

To read this article on click here.

Zacks Investment Research

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

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

In This Story


Other Topics

Earnings Stocks

Latest Markets Videos