We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Schlumberger (SLB) to Post Q3 Earnings: What's in Store?
Read MoreHide Full Article
Schlumberger Limited (SLB - Free Report) is scheduled to report third-quarter 2018 earnings on Oct 19, before the opening bell.
Last quarter, the company’s earnings of 43 cents per share beat the Zacks Consensus Estimate by a penny. Moreover, Schlumberger posted an average positive earnings surprise of 2.9% for the last four quarters.
Let’s see how things are shaping up prior to the announcement.
Which Way Are Estimates Headed?
Let’s take a look at the estimate revision trend to get a clear picture of what analysts expect from the earnings release.
The Zacks Consensus Estimate of 46 cents for the third quarter has been stable in the last seven days. It reflects growth of about almost 9.5% from the year-ago quarter.
Further, analysts polled by Zacks expect revenues of $8.6 billion for the quarter, up 8.7% from the prior-year quarter.
Factors to Consider
Per data provided by U.S. Energy Information Administration (EIA), the monthly average spot prices of West Texas Intermediate (WTI) crude for July, August and September of 2018 were recorded at $70.98 per barrel, $68.06 per barrel and $70.23 per barrel, respectively.
The average commodity prices were significantly higher than $46.63, $48.04 and $49.82 for the respective months of July, August and September of 2017. Traders mostly remained bullish on oil on optimism that the United States is going to implement sanctions on crude export by Iran — the third-largest producer of oil among the OPEC member countries — on Nov 4.
Natural gas also fared well following improving clean energy demand. The average monthly spot prices of the commodity for the respective months of third-quarter 2018 were $2.83 per Million Btu, $2.96 per Million Btu and $3.00 per Million Btu — representing healthier prices than third-quarter 2017.
Improvement in crude and natural gas prices will likely be favorable for Schlumberger as oilfield service businesses are positively correlated with commodity prices. This is reflected in the Zacks Consensus Estimate for each of the company’s business segments.
The Zacks Consensus Estimate for the Reservoir Characterization segment’s earnings before tax stands at $361 million, showing a rise from $311 million recorded in the year-earlier quarter.
Moreover, for the Drilling unit, the Zacks Consensus Estimate for earnings is pegged at $354 million, reflecting improvement from $301 million in the prior-year quarter.
For the Production business segment, the Zacks Consensus Estimate for earnings stands at $357 million, showing a rise from $283 million a year ago.
On top of that, Schlumberger’s balance sheet looks solid and is less levered than the broader industry. Notably, the oilfield service player’s debt-to-capitalization ratio of 27.3% is lower than the industry’s 29.2%.
However, with lower exposure to the prospective North American shale plays – where drilling activities are increasing despite the pipeline bottleneck problem – Schlumberger is losing out on opportunities to boost earnings. In the U.S. resources, the number of drilling rigs exploring both oil and natural gas increased by seven units through third-quarter 2018, per data released by Baker Hughes, a GE company .
Earnings Whispers
Our proven model does not conclusively show that Schlumberger is likely to beat estimates 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.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is -0.96%. This is because the Most Accurate estimate is pegged at 45 cents, while the Zacks Consensus Estimate stands at 46 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 #3. Though a favorable Zacks Rank increases the predictive power of ESP, the company’s negative Earnings ESP makes surprise prediction difficult.
Meanwhile, we caution investors against stocks with a Zacks Rank #4 or 5 (Sell Rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Though an earnings beat looks uncertain for Schlumberger, here are a few firms that you may want to consider on the basis of our model. These have the right combination of elements to post an earnings beat this quarter:
ConocoPhillips (COP - Free Report) , based in Houston, TX, is a leading oil and gas explorer and producer. The company has an Earnings ESP of +1.31% and a Zacks Rank #2.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Schlumberger (SLB) to Post Q3 Earnings: What's in Store?
Schlumberger Limited (SLB - Free Report) is scheduled to report third-quarter 2018 earnings on Oct 19, before the opening bell.
Last quarter, the company’s earnings of 43 cents per share beat the Zacks Consensus Estimate by a penny. Moreover, Schlumberger posted an average positive earnings surprise of 2.9% for the last four quarters.
Let’s see how things are shaping up prior to the announcement.
Which Way Are Estimates Headed?
Let’s take a look at the estimate revision trend to get a clear picture of what analysts expect from the earnings release.
The Zacks Consensus Estimate of 46 cents for the third quarter has been stable in the last seven days. It reflects growth of about almost 9.5% from the year-ago quarter.
Further, analysts polled by Zacks expect revenues of $8.6 billion for the quarter, up 8.7% from the prior-year quarter.
Factors to Consider
Per data provided by U.S. Energy Information Administration (EIA), the monthly average spot prices of West Texas Intermediate (WTI) crude for July, August and September of 2018 were recorded at $70.98 per barrel, $68.06 per barrel and $70.23 per barrel, respectively.
The average commodity prices were significantly higher than $46.63, $48.04 and $49.82 for the respective months of July, August and September of 2017. Traders mostly remained bullish on oil on optimism that the United States is going to implement sanctions on crude export by Iran — the third-largest producer of oil among the OPEC member countries — on Nov 4.
Natural gas also fared well following improving clean energy demand. The average monthly spot prices of the commodity for the respective months of third-quarter 2018 were $2.83 per Million Btu, $2.96 per Million Btu and $3.00 per Million Btu — representing healthier prices than third-quarter 2017.
Improvement in crude and natural gas prices will likely be favorable for Schlumberger as oilfield service businesses are positively correlated with commodity prices. This is reflected in the Zacks Consensus Estimate for each of the company’s business segments.
The Zacks Consensus Estimate for the Reservoir Characterization segment’s earnings before tax stands at $361 million, showing a rise from $311 million recorded in the year-earlier quarter.
Moreover, for the Drilling unit, the Zacks Consensus Estimate for earnings is pegged at $354 million, reflecting improvement from $301 million in the prior-year quarter.
For the Production business segment, the Zacks Consensus Estimate for earnings stands at $357 million, showing a rise from $283 million a year ago.
On top of that, Schlumberger’s balance sheet looks solid and is less levered than the broader industry. Notably, the oilfield service player’s debt-to-capitalization ratio of 27.3% is lower than the industry’s 29.2%.
However, with lower exposure to the prospective North American shale plays – where drilling activities are increasing despite the pipeline bottleneck problem – Schlumberger is losing out on opportunities to boost earnings. In the U.S. resources, the number of drilling rigs exploring both oil and natural gas increased by seven units through third-quarter 2018, per data released by Baker Hughes, a GE company .
Earnings Whispers
Our proven model does not conclusively show that Schlumberger is likely to beat estimates 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.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is -0.96%. This is because the Most Accurate estimate is pegged at 45 cents, while the Zacks Consensus Estimate stands at 46 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 #3. Though a favorable Zacks Rank increases the predictive power of ESP, the company’s negative Earnings ESP makes surprise prediction difficult.
Meanwhile, we caution investors against stocks with a Zacks Rank #4 or 5 (Sell Rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Schlumberger Limited Price and EPS Surprise
Schlumberger Limited Price and EPS Surprise | Schlumberger Limited Quote
Stocks to Consider
Though an earnings beat looks uncertain for Schlumberger, here are a few firms that you may want to consider on the basis of our model. These have the right combination of elements to post an earnings beat this quarter:
Occidental Petroleum Corporation (OXY - Free Report) is an integrated energy player. The firm has an Earnings ESP of +0.34% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
ConocoPhillips (COP - Free Report) , based in Houston, TX, is a leading oil and gas explorer and producer. The company has an Earnings ESP of +1.31% and a Zacks Rank #2.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>