It has been about a month since the las t earnings report for Schlumberger (SLB). Shares have lost about 11.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Schlumberger due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recen t earnings report in order to get a better handle on the important drivers.
Schlumberger Q4 Earnings & Revenues Beat Estimates
Schlumberger's fourth-quarter 2019 earnings of 39 cents per share (excluding charges and credits) surpass the Zacks Consensus Estimate of 37 cents. The bottom line also increased from 36 cents a year ago.
The oilfield service giant recorded total revenues of $8,228 million, which beat the Zacks Consensus Estimate of $8,188 million and improved from the year-ago quarter's $8,180 million.
The increase in Surface Systems, Drilling Systems, OneSubsea revenues in the international markets along with strong SIS digital software sales backed the company's strong quarterly results.
Reservoir Characterization and Cameron segments saw a year-over-year increase in revenues, while the Drilling and Production units reported a decline.
Strong SIS digital software sales primarily aided the Reservoir Characterization segment. Moreover, the rise in Drilling Systems, OneSubsea and Surface Systems' revenues in the international markets drove the company's Cameron unit. This was partially offset by the decline in land activities in North America.
However, lower margins from the North America land market and Russia hurt the company's Drilling unit. Moreover, the dip in OneStim revenues hurt the Production unit, partially offset by higher international margins.
Revenues at the Reservoir Characterization unit totaled $1,643 million, 5% higher from the year-ago period. Moreover, pre-tax operating income of $368 million was up 2% year over year.
Revenues at the Drilling unit declined 1% year over year to $2,442 million. Moreover, pre-tax operating income was $303 million, down 5% year over year.
Revenues at the Production segment declined 2% from the year-earlier quarter to $2,867 million. However, pre-tax operating income increased 27% year over year to $253 million.
Revenues at the Cameron segment amounted to $1,387 million, up 3% year over year. However, pre-tax operating income declined 4% from the prior-year quarter to $126 million.
As of Dec 31, 2019, the company had approximately $2,167 million in cash and short-term investments plus $14,770 million in long-term debt. This represented a debt-to-capitalization ratio of 38.8%.
Schlumberger projects 2020 capital expenditure at $1.7 billion, suggesting no change from 2019 spending.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -12.05% due to these changes.
Currently, Schlumberger has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Schlumberger has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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