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What's in the Cards for Schlumberger (SLB) in Q2 Earnings?

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Oilfield services behemoth, Schlumberger Ltd. (SLB - Free Report) is expected to report second-quarter 2017 earnings on Jul 21, before the opening bell.

Last quarter, the company’s earnings of 25 cents per share were in line with the Zacks Consensus Estimate but decreased from 40 cents reported in the year-ago quarter. Investors should note that the company outpaced the Zacks Consensus Estimate in each of the trailing four quarters. Let’s see how things are shaping up prior to the announcement.
 

Schlumberger N.V. Price and EPS Surprise

 

Schlumberger N.V. Price and EPS Surprise | Schlumberger N.V. Quote

Factors to Consider

Schlumberger is the largest oilfield services player in the world and is present in every energy market across the world. In all its operating business segments, the company maintains its position as one of the players. Given its size, attractive reservoir and well-established technology, the company is likely to outperform peers.
 
We appreciate the company’s greater reliance on international market where operations are expected to get a boost in late 2017 to 2018. Although, activities outside the U.S. have hit fresh lows in the first quarter but in the long run, Schlumberger is expected to gain from its international operations.

However, weaknesses in oil and gas prices could mar demand for oilfield services by upstream energy companies. During the April-to-June quarter of this year, oil and natural gas prices fell 8.4% and 5%, respectively. Lower commodity prices might lead to reduced exploration and production activities. This could call for lower investments by oil majors which will impact revenues of the company.

Price Performance in Q2

During the quarter, Schlumberger’s share price have lost 12.6% compared with the 15.1% decline of the Zacks categorized Oil and Gas – Field Services industry.

Earnings Whispers

Our proven model does not conclusively show that Schlumberger is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP: Earnings ESP for the company is +6.67% as the Most Accurate estimate is pegged at 32 cents, while the Zacks Consensus Estimate is at 30 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Schlumberger carries a Zacks Rank #4 (Sell). Please note that we caution investors against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.

Stocks to Consider

Although, earnings beat looks uncertain for Schlumberger, here are some firms that you may want to consider on the basis of our model, as they have the right combination of elements to post an earnings beat this quarter:

Boardwalk Pipeline Partners LP (BWP - Free Report) , has an Earnings ESP of +3.45% and sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

TransCanada Corporation (TRP - Free Report) , has an Earnings ESP of + 7.84% and sports a Zacks Rank #1.

The Williams Companies Inc (WMB - Free Report) , has an Earnings ESP of + 22.22% and a Zacks Rank #3.

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