Schlumberger versus peers and industry
Schlumberger (SLB), the largest oilfield equipment and services (or OFS) provider by market capitalization, has had a steady run in the stock market in 2016. On September 1, 2016, SLB was trading at $78.96, ~14% higher than its price at the beginning of the year.
The VanEck Vectors Oil Services ETF (OIH), an ETF tracking an index of 25 OFS companies, has risen by 3% since the beginning of 2016. McDermott International (MDR), SLB’s smaller market cap peer, has risen by 57% during the same period. SLB makes up 0.58% of the SPDR S&P 500 ETF (SPY).
What does Schlumberger’s share price movement tell us?
In the past year, Schlumberger’s share price has trended upward since January. SLB’s revenue rose in 2Q16 after staying weak in the previous three quarters. Its net income, however, slumped again in 2Q16 after improving in 1Q16.
Since SLB’s price reached its one-year low in the third week of January, it has recovered by 29%. Crude oil’s price rise in 2016 partially explains SLB’s steady run. West Texas Intermediate crude oil has recovered by 18% year-to-date.
Schlumberger’s moving averages
On September 1, Schlumberger’s share price was at a 1.3% discount to its 50-day moving average. It was trading 5.3% above its 200-day moving average.
Moving averages exhibit smoother trends following a stock’s price movements. A 50-day moving average is a short-term moving average, while a 200-day moving average shows a long-term trend. SLB’s short-term moving average crossed over its long-run moving average in the second week of May 2016.
SLB’s share price has stayed above its long-term moving average since the third week of May, but it dipped below its short-term moving average in the last week of August. This indicates bullish momentum in SLB’s share price. However, the stock could face short-term headwinds.
In this series, we’ll discuss Schlumberger’s returns and why they’ve been steady. We’ll also discuss Schlumberger’s top line and bottom line growth, its balance sheet, its free cash flow, its dividend, its industry growth drivers, and its valuation multiples.
Let’s start with its management’s comments in the next article.