Schlumberger’s year-to-date stock price
Schlumberger (SLB), the largest oilfield equipment and services provider by market capitalization, has had a fair run in the stock market so far in 2015. On November 20, 2015, SLB was trading at $77.15. This was ~8% lower than its price at the beginning of the year.
The VanEck Vectors Oil Services ETF (OIH), an ETF tracking index of 25 OFS (oilfield services) companies, fell 16% during the same period. Oceaneering International (OII), SLB’s smaller market cap peer, fell even more, by 24% since January 1, 2015. Compared to SLB’s ~$97 billion market capitalization, OII’s market capitalization stands at ~$4.5 billion.
What does SLB’s share price movement tell us?
Since the beginning of 2015, SLB’s share price went as high as ~$92 in April. SLB released its fiscal 1Q15 results in April. Despite a sharp fall in energy prices since June 2014 and the consequent decline in upstream companies’ exploration and production spending, SLB’s net income improved in fiscal 1Q15 compared to fiscal 4Q14.
SLB’s share price started falling in May. On June 26, 2015, SLB entered into an agreement to acquire Cameron International (CAM). The market reaction to this news didn’t seem to favor SLB’S share price, and in late September, SLB’s share price fell to ~$68 per share, its lowest in 2015. Since then, SLB has risen 14%.
SLB’s moving averages
On November 20, 2015, SLB’s share price was at a 2% premium to its 50-day moving average (or MA). It was trading 6% below its 200-day moving average.
Moving averages exhibit a smoother trend following the stock’s price movement. A 50-day MA is a short-term MA, while a 200-day MA shows a long-term trend. Note that during June, the short-term MA crossed above the long-term MA for August, sending a bullish signal to SLB stock. However, the pattern reversed in August, as we see in the graph above, indicating a weakness in SLB’s price. SLB stock is currently supported by the 50-day MA at $75.50 but is also trapped under its 200-day MA at $82.50.
What’s up next for SLB investors?
Schlumberger’s (SLB) revenues and net income have continued to decline in fiscal 3Q15. Compared to fiscal 2Q15 and fiscal 3Q14, its fiscal 3Q15 adjusted net income was 12% and 49% lower, respectively. The energy sector has also not improved compared to what it was a quarter ago. So on both a technical and fundamental basis, SLB’s stock could be considered weak for now.