Schlumberger Limited, now known as SLB, is set to report its fiscal first-quarter results on Friday, April 19. Expectations are high for the company, with revenues and earnings expected to exceed market expectations in the first quarter. The international and offshore markets for SLB are experiencing a strong resurgence of activity due to long-cycle development and capacity expansion projects. Factors such as supply cuts from Saudi Arabia and Russia, as well as strong demand in Europe, have created a more supportive environment for oil prices. However, concerns about potential economic slowdown in the U.S. could impact demand in the short term.
In the first quarter, SLB anticipates revenue growth in the low teens year-over-year and EBITDA growth in the mid-teens. This is expected to be followed by a seasonal activity bounce in the second quarter and further acceleration of growth in the second half of fiscal year 2024. The company is optimistic about its subsea outlook, with over $100 billion in global offshore final investment decisions expected in 2024-25. SLB also anticipates generating more than $4 billion in new subsea bookings in 2024, a significant increase from the previous year.
Although SLB stock has seen significant gains in recent years, with a 150% increase from early 2021, returns have been inconsistent. The stock underperformed the S&P 500 in 2023, despite previous strong performances in 2021 and 2022. The Trefis High Quality Portfolio, on the other hand, has outperformed the S&P 500 consistently over the same period, demonstrating better returns with less risk. With the current macroeconomic environment posing challenges such as high oil prices and elevated interest rates, the performance of SLB stock in the next 12 months remains uncertain.
Trefis estimates SLB’s revenue for Q1 2024 to be around $8.8 billion, slightly ahead of consensus estimates. International revenue was a key driver of growth in the previous quarter, with a 18% year-over-year increase to $7.29 billion. The company’s performance across different segments also showed growth, with Well Construction revenues gaining 6%, Production Systems revenues jumping 33%, and Reservoir Performance revenues rising by 12% year-over-year. For the full fiscal year 2024, SLB is expected to see revenues of $37.3 billion, marking a 13% increase year-over-year.
In terms of earnings per share, SLB’s Q1 2024 EPS is expected to come in at 77 cents, slightly above consensus estimates. The company’s net income for Q4 2023 increased to $1.11 billion, or $0.77/share, compared to $1.07 billion, or $0.74/share, in the same quarter the previous year. Based on Trefis analysis, the stock price estimate for SLB is $58 per share, representing a 13% increase from the current market price. This valuation is determined by an EPS estimate of $3.63 and a P/E multiple of 16.0x for fiscal 2024. Comparisons with peers in the industry can provide further insights into SLB’s performance.
