Back to top

Analyst Blog

Mark Vickery

Will Schlumberger (SLB) Beat Earnings Estimates This Quarter?

BHI SLB WTI PQ

 ZacksTrade Now

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

Leading oilfield services company, Schlumberger Limited (SLB - Analyst Report) is set to report its second-quarter 2013 results on Jul 19. Let’s see how things are shaping up prior to the announcement.

In the last quarter, the company’s earnings of $1.01 per share increased 5.2% year-over-year from 96 cents per share. 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 99 cents.

Growth Factors this Past Quarter

In the first quarter, Schlumberger witnessed seasonal activity slowdowns in the North Sea, Russia and China, weather-related work delays in the Brunei, Malaysia & Philippines and Australasia GeoMarkets, and lower pricing as a result of excess capacity in the U.S. However, these sequential effects were partially offset by strong exploration and drilling activity in Angola, and strong winter project activity in Western Canada & Alaska.

Looking forward, 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 first quarter.

Schlumberger expects its international spending on exploration and production to climb 10% this year and activity to increase 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.

On the flip side, lower-than-expected rig activity and continued pricing weakness is keeping management apprehensive about its North American operations. However owing to Schlumberger’s far-reaching international presence and deep-water exploration, it faces less North America exposure than rivals like Baker Hughes Inc. (BHI - Analyst Report).

Earnings Whispers?

Our proven model does not conclusively show that Schlumberger is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive earnings Expected Surprise Prediction or ESP (Read: Zacks Earnings ESP: A Better Method) and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here as you will see below.

Zacks ESP: The ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is -1.80%. This is because the Most Accurate estimate stands at $1.09 while the Zacks Consensus Estimate currently stands at $1.11.

Zacks Rank #3 (Hold): Schlumberger’s Zacks Rank #3 (Hold) when combined with an ESP of -1.80% lowers the predictive power of ESP, indicating the possibility of a decline in results. We caution against stocks with Zacks Ranks #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.

W&T Offshore Inc. (WTI - Snapshot Report) has earnings ESP of +9.09% and a Zacks Rank #1 (Strong Buy).

PetroQuest Energy Inc. (PQ - Snapshot Report) has earnings ESP of +28.57% and a Zacks Rank #1 (Strong Buy).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
DIXIE GRP IN DXYN 15.84 +7.90%
BOFI HLDG IN BOFI 85.30 +4.97%
RAMBUS INC RMBS 12.31 +4.41%
VIPSHOP HOLD VIPS 148.73 +4.35%
NETFLIX INC NFLX 345.74 +4.32%