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Schlumberger (SLB) Down 7.5% Since Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Schlumberger N.V. (SLB - Free Report) . Shares have lost about 7.5% in in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock’s next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Fourth-Quarter 2016 Results
Schlumberger’s fourth-quarter 2016 earnings of $0.27 per share (excluding charges and credits) were in line with the Zacks Consensus Estimate. Higher activities in the U.S. land market, recovery of fracturing works in unconventional resources, and higher horizontal logging work in Qatar favored the result.
However, the bottom line decreased substantially from $0.65 per share earned in the year-earlier quarter. Slowdown of drilling works due to frigid winter in Russia and Norway resulted in the year-over-year deterioration.
Schlumberger reported total revenue of $7,107 million. The top line deteriorated from the year-earlier level of $7,744 million but topped the Zacks Consensus Estimate of $7,096 million.
Segmental Performance
Each of the groups – Reservoir Characterization, Drilling Group and Production Group – registered year-over-year fall in revenues.
Drilling Group revenues decreased primarily due to slowdown in activities owing to severe winter conditions in Russia and Norway. However, the negatives were partially mitigated by the improvement in land market activities in the U.S.
Results of the Production Group were adversely impacted by reduced completion works in certain regions. Recovery of fracturing works in unconventional resources partially offset the negatives.
Reservoir Characterization segment was affected by seasonal decline in wireline operations in the Northern Hemisphere. However, higher horizontal logging work in Qatar, along with increased software license and maintenance sales, partially offset the negatives.
Reservoir Characterization: This group posted revenues of $1,699 million as against $2,193 million in the prior-year quarter. Pre-tax operating income was $316 million, down 39% year over year.
Drilling Group: Revenues of $2,013 million plunged 32% year over year. Pre-tax operating income was $234 million, down 53% year over year.
Production Group: Revenues recorded by this group declined 17% from the year-earlier quarter to $2,179 million. Pre-tax operating income was $132 million, down 56% year over year.
Financials
As of Dec 31, 2016, company had approximately $9,257 million in cash and short-term investments and $16,463 million in long-term debt, representing a debt-to-capitalization ratio of 32.1%. In the reported quarter, the company repurchased 1.5 million shares at an average price of $78.21 for a total purchase price of $116 million.
Guidance
During 2017, the company will likely invest $2.2 billion. This is slightly higher than $2.1 billion invested during 2016.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month. There have been three revisions higher for the current quarter compared to seven lower. In the past month, the consensus estimate has shifted 7.55% downward due to these changes.
At this time, Schlumberger's stock has a subpar Growth score of 'D', though it is lagging a bit on the momentum front with an 'F'. Charting a somewhat similar path, the stock was allocated a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregte VGM Score of 'F'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate investors will probably be better served looking elsewhere.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
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Schlumberger (SLB) Down 7.5% Since Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Schlumberger N.V. (SLB - Free Report) . Shares have lost about 7.5% in in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock’s next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Fourth-Quarter 2016 Results
Schlumberger’s fourth-quarter 2016 earnings of $0.27 per share (excluding charges and credits) were in line with the Zacks Consensus Estimate. Higher activities in the U.S. land market, recovery of fracturing works in unconventional resources, and higher horizontal logging work in Qatar favored the result.
However, the bottom line decreased substantially from $0.65 per share earned in the year-earlier quarter. Slowdown of drilling works due to frigid winter in Russia and Norway resulted in the year-over-year deterioration.
Schlumberger reported total revenue of $7,107 million. The top line deteriorated from the year-earlier level of $7,744 million but topped the Zacks Consensus Estimate of $7,096 million.
Segmental Performance
Each of the groups – Reservoir Characterization, Drilling Group and Production Group – registered year-over-year fall in revenues.
Drilling Group revenues decreased primarily due to slowdown in activities owing to severe winter conditions in Russia and Norway. However, the negatives were partially mitigated by the improvement in land market activities in the U.S.
Results of the Production Group were adversely impacted by reduced completion works in certain regions. Recovery of fracturing works in unconventional resources partially offset the negatives.
Reservoir Characterization segment was affected by seasonal decline in wireline operations in the Northern Hemisphere. However, higher horizontal logging work in Qatar, along with increased software license and maintenance sales, partially offset the negatives.
Reservoir Characterization: This group posted revenues of $1,699 million as against $2,193 million in the prior-year quarter. Pre-tax operating income was $316 million, down 39% year over year.
Drilling Group: Revenues of $2,013 million plunged 32% year over year. Pre-tax operating income was $234 million, down 53% year over year.
Production Group: Revenues recorded by this group declined 17% from the year-earlier quarter to $2,179 million. Pre-tax operating income was $132 million, down 56% year over year.
Financials
As of Dec 31, 2016, company had approximately $9,257 million in cash and short-term investments and $16,463 million in long-term debt, representing a debt-to-capitalization ratio of 32.1%. In the reported quarter, the company repurchased 1.5 million shares at an average price of $78.21 for a total purchase price of $116 million.
Guidance
During 2017, the company will likely invest $2.2 billion. This is slightly higher than $2.1 billion invested during 2016.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month. There have been three revisions higher for the current quarter compared to seven lower. In the past month, the consensus estimate has shifted 7.55% downward due to these changes.
Schlumberger N.V. Price and Consensus
Schlumberger N.V. Price and Consensus | Schlumberger N.V. Quote
VGM Scores
At this time, Schlumberger's stock has a subpar Growth score of 'D', though it is lagging a bit on the momentum front with an 'F'. Charting a somewhat similar path, the stock was allocated a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregte VGM Score of 'F'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate investors will probably be better served looking elsewhere.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.