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A Pre-Earnings Analysis of Schlumberger before 3Q17

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A Pre-Earnings Analysis of Schlumberger before 3Q17 PART 1 OF 8

What Analysts Expect from Schlumberger’s 3Q17 Earnings

Schlumberger’s 3Q17 earnings estimates

In 3Q17, Wall Street analysts expect Schlumberger (SLB) to report adjusted earnings per share (or EPS) of ~$0.42. Analysts expect SLB’s adjusted earnings to increase 19% in 3Q17 from its 2Q17 adjusted EPS of $0.35. Schlumberger plans to hold its 3Q17 earnings conference call on October 20, 2017.

A robust crude oil price recovery, strong hydraulic fracturing order bookings, joint ventures, and a brighter outlook for the Gulf countries in the OPEC region and Russia are expected to improve SLB’s 3Q17 earnings. However, a deceleration in the US rig count additions and slower recovery at some of SLB’s international operations can partially dent its growth outlook.

What Analysts Expect from Schlumberger’s 3Q17 Earnings

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From 2Q16 to 2Q17, SLB’s adjusted earnings improved 52%, which reflects a higher rig count and some pricing recovery due to stronger energy drilling and production activities. SLB comprises 3.0% of the SPDR S&P Oil & Gas Equipment & Services ETF (XES).

Since October 3, 2016, XES has decreased 14% compared to the 12% fall in SLB’s stock price during the same period. The S&P 500 Index (SPX-INDEX) has also increased 17% in the past year.

Schlumberger’s earnings versus estimates

In 2Q17, Schlumberger’s adjusted EPS marginally exceeded analysts’ consensus EPS. On an average, its adjusted EPS exceeded consensus EPS by ~6% in the past 13 quarters until 2Q17.

Analysts’ estimates for SLB’s peers

In comparison, Halliburton’s (HAL) 3Q17 adjusted earnings are expected to improve 37% compared to 2Q17. Wall Street analysts expect National Oilwell Varco’s (NOV) 3Q17 adjusted earnings to improve to -$0.08 compared to its 2Q17 adjusted earnings of -$0.14.

TechnipFMC’s (FTI) 3Q17 adjusted earnings are expected to improve marginally compared to its adjusted 2Q17 earnings. You can read about what analysts expect of OFS companies’ 3Q17 earnings in Market Realist’s The Top and Bottom of Oilfield Service Stocks in 3Q17.

Series highlights

In this series, we’ll discuss Schlumberger’s outlook and value drivers, as well as what the sell-side analysts are suggesting for SLB. Next, we’ll discuss SLB’s management outlook in the past few quarters.

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