Schlumberger compared to peers and industry
Schlumberger (SLB), the largest OFS (oilfield services and equipment) provider by market capitalization, had a fair run in the Market in 2016. On May 26, 2016, SLB was trading at $78.13. This was ~13% higher than its price at the beginning of this year.
The VanEck Vectors Oil Services ETF (OIH), which tracks 25 OFS companies, has risen 6% since January 1, 2016. Precision Drilling (PDS), SLB’s smaller market cap peer, has risen 15% during the same period. The price of crude oil has recovered 34% year-to-date.
What does Schlumberger’s share price movement tell us?
Since June 2015, Schlumberger’s share price has trended downward. SLB’s revenues in the past four quarters have persistently stayed weak. Its net income improved in fiscal 1Q16 over the previous quarter after falling significantly in the three quarters before that. Since the third week of January, when SLB’s price reached its one-year low, it has recovered 28%. SLB is 0.6% of the SPDR S&P 500 ETF (SPY).
Schlumberger’s moving averages
On May 26, 2016, Schlumberger’s share price was at a 3.5% premium to its 50-day moving average (or DMA). It was trading 5.8% above its 200-DMA.
Moving averages show a smoother trend following the stock’s price movement. A 50-DMA is a short-term moving average, while a 200-DMA shows a long-term trend. SLB’s short-run moving average, which largely stayed below its long-run moving average in the past one year, crossed over it in the second week of May. SLB’s share price went above its short-run and long-run moving averages in the third week of May. This indicates that SLB’s share price is showing bullish momentum.
In this series, we’ll see why returns from Schlumberger’s share price have been steady. We’ll also look at its top-line and bottom-line growth, balance sheet, free cash flow, dividends, and valuation multiples. Let’s start by seeing what the company’s management is saying.