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Oilfield Servicers Look to Register Double-Digit Earnings Growth

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The Zacks Oils and Energy Sector has been one of the best places for investors to park cash throughout 2022, increasing more than 10% in value. Although the past month hasn’t been strong for companies residing in the sector, most of them are still well in the green year-to-date.

We’ll receive several quarterly reports from companies within the sector starting next week, including Schlumberger (SLB - Free Report) , Baker Hughes (BKR - Free Report) , and Halliburton (HAL - Free Report) .

The year-to-date chart below illustrates the performance of all three companies.

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All three companies operate within the oilfield services industry. Let’s take a closer look at each one to see how things shape up heading into next week.

Schlumberger

Schlumberger (SLB - Free Report) is currently a Zacks Rank #2 (Buy) with an overall VGM Score of an A. Over the last 60 days, investors have marginally upped their earnings outlook.

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Currently, the Zacks Consensus EPS Estimate for the quarter sits at $0.40, good enough for a 33% double-digit expansion in quarterly earnings year-over-year.

Furthermore, quarterly sales estimates display top-line strength; the $6.3 billion quarterly revenue estimate reflects an 11% increase in quarterly sales from the year-ago quarter.

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SLB sports a 1.7X forward price-to-sales ratio, a tick below its five-year median value of 1.8X and nowhere close to highs of 3.3X in 2018. Additionally, the value represents an enticing 40% premium relative to the S&P 500.

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Schlumberger typically reports bottom-line results above expectations; the company has recorded six consecutive bottom-line beats. Furthermore, SLB has beaten quarterly revenue estimates in six of its last ten quarters.

Baker Hughes

Baker Hughes (BKR - Free Report) is currently a Zacks Rank #3 (Hold) with an overall VGM Score of a B. Analysts have dialed back their earnings estimates modestly.

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Quarterly earnings are forecasted to increase substantially – the Zacks Consensus EPS Estimate of $0.22 pencils in a triple-digit 120% growth in earnings from the year-ago quarter.

Furthermore, the top-line also looks to expand modestly, with the $5.4 billion quarterly revenue estimate notching a 4.5% uptick in quarterly revenue year-over-year.

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Baker Hughes’ forward P/S ratio resides at 1.2X, above its five-year median value of 1.0X but nicely below that of the S&P 500, reflecting an enticing 60% discount.

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Bottom-line results leave much to be desired – out of its last ten quarterly reports, the company has exceeded the Zacks Consensus EPS Estimate just twice, undoubtedly a concern. In addition, quarterly sales results have primarily been mixed, with BKR exceeding quarterly sales estimates five times over its last ten quarterly reports.

Halliburton

Halliburton (HAL - Free Report) sports a Zacks Rank #2 (Buy) with an overall VGM Score of an A. One analyst has positively revised their earnings outlook, and the Consensus Estimate Trend has remained unchanged for the quarter to be reported.

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The Zacks Consensus EPS Estimate for the quarter is $0.45, notching a substantial 73% double-digit increase in quarterly earnings year-over-year.

Quarterly sales are forecasted to grow substantially as well, with the $4.7 billion quarterly estimate penciling in a nearly 30% year-over-year uptick.

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Halliburton boasts a 1.3X forward price-to-sales ratio, just barely above its five-year median of 1.2X but well below highs of 2.2X in 2018. In addition, shares are relatively cheap compared to the S&P 500; the value represents a 55% discount.

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Looking back a little, the company’s bottom-line results have been strong over its last ten quarters, recording eight EPS beats. However, quarterly sales results have been mixed – over its previous ten quarterly reports, HAL has exceeded quarterly sales estimates five times.

Bottom Line

The energy sector has been scorching hot throughout 2022, rewarding investors handsomely all along the way. Soaring energy costs due to geopolitical issues and supply chain disruptions have undoubtedly benefitted these companies.

Heading into earnings season, top and bottom-line forecasts allude to profound growth. With supply chain disruptions and geopolitical issues persisting, energy looks set to have a huge year.


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Schlumberger Limited (SLB) - free report >>

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