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Is a Beat in the Offing for Schlumberger (SLB) Q1 Earnings?

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Schlumberger Limited (SLB - Free Report) is expected to beat first-quarter 2020 earnings estimates when it reports results on Apr 23, before the opening bell.

In the last reported quarter, the leading oilfield service firm reported adjusted earnings of 22 cents per share, surpassing the Zacks Consensus Estimate of 18 cents, thanks to contributions from digital solutions and multiclient seismic license sales. This was partially offset by lower evaluation work, and stimulation in Qatar and Saudi Arabia.

As far as earnings surprise is concerned, the Houston, TX-based company is on a firm footing as it beat the Zacks Consensus Estimate in the last four quarters, with the average being 16.5%. 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

Let’s see how things have shaped up prior to the upcoming earnings announcement.

Trend in Estimate Revision

The Zacks Consensus Estimate of 19 cents per share has seen three upward estimate revisions and one downward movement over the past 30 days. The estimated figure suggests a decline of 24% from the prior-year reported number.

Further, the Zacks Consensus Estimate for revenues of $5.1 billion indicates a 31.8% decline from the prior-year quarter.

What the Quantitative Model Suggests

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.

Earnings ESP: Schlumberger has an Earnings ESP of +6.95%. This is because the Most Accurate Estimate for the quarter’s earnings is 20 cents per share while the Zacks Consensus Estimate is 19 cents. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

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

Factors Driving the Better-Than-Expected Earnings

There has been modest resumption of drilling operations in North America in the first quarter. Prices of both West Texas Intermediate and Brent crude oil recovered in the March quarter. This might have led to a rebound in drilling activities across shale plays, thereby boosting upstream spending. Bullish sentiment in the U.S. energy market is expected to have boosted Schlumberger’s bottom line.

Importantly, the company’s greater reliance on the lucrative international market is expected to have played a key role in the first quarter. In the overseas market, as most offshore projects are backed by national oil companies and integrated majors that target the long haul, short-term fluctuations might have had lesser impact on operations. As such, the international market is likely to have supported Schlumberger’s first-quarter earnings. Markedly, the Zacks Consensus Estimate for revenues from Latin America is pegged at $969 million, indicating a rise from the year-ago period’s $945 million.

Other Stocks That Warrant a Look

Here are some other firms that you may want to consider as these too have the right combination of elements to post an earnings beat in the upcoming quarterly reports:

EOG Resources, Inc. (EOG - Free Report) has an Earnings ESP of +14.80% and a Zacks Rank of 1. It is scheduled to report first-quarter results on May 6. You can see the complete list of today’s Zacks #1 Rank stocks here.

Baker Hughes Company (BKR - Free Report) has an Earnings ESP of +3.97% and is a Zacks #3 Ranked player. The company is scheduled to release first-quarter results before the opening bell on Apr 21.

Continental Resources, Inc. (CLR - Free Report) has an Earnings ESP of +51.11% and a Zacks Rank #3. The firm is scheduled to release quarterly earnings on Apr 28.

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