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Why Hold Strategy is Apt for Schlumberger (SLB) Stock Now

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Schlumberger Limited (SLB - Free Report) is the world’s largest oilfield service player and is expected to record year-over-year earnings growth of 6% in the December-end quarter of 2019. Moreover, it has an impressive earnings surprise history. The company has a positive earnings surprise of 2%, on average, for the past four quarters.

Let’s delve deeper to find out why this Zacks Rank #3 (Hold) stock is worth retaining in your portfolio at the moment.

Factors Favoring the Stock

Schlumberger has businesses in almost all the energy markets across the world. The company’s operating segments are superior to most of its peers. Moreover, over the past year, the oilfield service firm has been consistently paying higher dividend yield than the composite stocks in the industry it belongs to.

The company’s operations outside North America seems lucrative since the drillers have been adding rigs across oil and gas plays in the international market. This is because there has been a rise in the number of new upstream projects receiving approvals for final investment decisions. Thus, demand for the company’s oilfield services will continue to grow in international markets.

Factors Deterring the Stock

Explorers and producers in the North America land market have become increasingly conservative when it comes to capital spending. In fact, explorers decided to curb capital spending for the second consecutive year in 2020. Thus, drillers in the continent are likely to continue removing rigs from oil resources. The curtailment in drilling programs is likely to lower demand for the company’s oilfield services in North America.

Stocks to Consider

Some better-ranked players in the energy space are Murphy USA Inc (MUSA - Free Report) , CNX Resources Corporation (CNX - Free Report) , and Contango Oil & Gas Company . While Murphy USA sports a Zacks Rank #1 (Strong Buy), CNX Resources, and Contango Oil & Gas carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Murphy USA beat the Zacks Consensus Estimate in three of the prior four quarters.

CNX Resources surpassed the Zacks Consensus Estimate in two of the prior four quarters. It has a positive earnings surprise of 34.8%, on average, for the trailing four quarters.

Contango Oil & Gas is likely to see 87% bottom-line growth in 2019.

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