Core Laboratories’ Dividend Yield Curve



Core Laboratories’ revenue and earnings

In this final part of our series, we’ll look at Core Laboratories (CLB), which offers reservoir description, production enhancement, and reservoir management services to the global oil and gas industry. Its revenue fell 25.0% in 2016 compared to 27.0% in 2015. Revenue from services was driven by a decline in every segment, including reservoir description, production enhancement, and reservoir management. Operating income fell 46.0% in 2016 compared to 54.0% in 2015. The numbers for 2015 were marred by a severance charge and other expenses, offset by lower operating expenses. Interest expenses fell in 2016 after rising in 2015. Diluted EPS (earnings per share) fell 46.0% in 2016 compared to 54.0% in 2015. EPS for 2015 was also enhanced by share buybacks.

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Core Laboratories recorded a 7.0% rise in revenue for the first half of 2017. The growth was driven by production enhancement, offset by reservoir description. Operating income rose 22.0%, driven by margins and offset by higher operating expenses. Diluted EPS rose 23.0%, driven by lower interest expenses. The company has maintained a decent free cash flow balance.

Core Laboratories’ dividend trajectory

We can see that the company’s dividend has remained intact over the years. The dividend yield curve has been downward sloping until 2016 as prices were rising. However, the yield curve started taking an upward turn after 2016 as prices started falling, as you can see in the price chart below. The company is currently maintaining a dividend yield of 2.0%.

Let’s look at two ETFs with exposure to Core Laboratories. The PowerShares Dynamic Oil & Gas Services ETF (PXJ) offers a 1.5% dividend yield. It has a 92.0% exposure to energy. The VanEck Vectors Oil Services ETF (OIH) offers a 2.2% dividend yield at a PE (price-to-earnings) multiple of 9.5x. It has a 96.0% exposure to energy.


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