Did Schlumberger’s 3Q17 Earnings Match the Estimates?

Schlumberger’s 3Q17 revenues

Schlumberger (SLB) released its 3Q17 financial results on October 20, 2017. Its total revenues were ~$7.9 billion, a 12.6% rise from ~$7.1 billion in 3Q16. The rise was mainly due to higher hydraulic fracturing activity in North America, stronger drilling services revenues, and strong activity in Russia, the North Sea (in Europe), and Asia.

Compared to 2Q17, Schlumberger’s revenue increase of ~6.0% was moderate. Despite stronger North American revenues, flat revenues from many of its international operations resulted in lower sequential revenue growth in 3Q17.

Did Schlumberger’s 3Q17 Earnings Match the Estimates?

Schlumberger’s 3Q17 earnings

Schlumberger’s 3Q17 adjusted net EPS (earnings per share) was $0.42. That matched the consensus sell-side analyst estimate. Strong hydraulic fracturing and higher directional drilling in the United States, increased production group activity in many international geographies, and higher IPS (Integrated Production Services) revenues in Saudi Arabia boosted SLB’s 3Q17 earnings. However, they were partially offset by operational disruptions in North America and flat growth in Latin America, leading to earnings matching analysts’ estimates. Compared to 3Q16, SLB’s adjusted earnings rose 68.0% in 3Q17.

On average, SLB’s adjusted EPS has exceeded the consensus EPS by ~6.0% in the past 13 quarters. Schlumberger makes up 18.7% of the Market Vectors Oil Services ETF (OIH), which tracks an index of 25 OFS (oilfield services and equipment) companies. SLB also makes up 0.40% of the SPDR S&P 500 ETF (SPY) (SPX-INDEX), which rose 20.0% in the past year compared to a 22.0% fall in SLB stock for the same period.

What affected Schlumberger’s reported earnings in 3Q17?

In 3Q17, SLB’s reported net income was ~$545.0 million. That was a significant rise over $176.0 million in 3Q16. It was also an improvement over 2Q17 when Schlumberger reported a $74.0 million net loss.

SLB’s 3Q17 net income got a boost primarily from improved operating income. We’ll look at SLB’s segmental operating performance in detail in the next part of this series. In comparison, its 3Q16 net earnings were affected by $88.0 million in pre-tax, merger-related charges and $149.0 million in amortization of the fair value adjustment of its purchase accounting inventory.

Analysts’ estimates for SLB’s peers

Wall Street analysts expect National Oilwell Varco (NOV) to lower its adjusted losses in 3Q17 compared to 2Q17. Halliburton’s (HAL) 3Q17 earnings are expected to improve remarkably over 2Q17. You can read more on HAL’s 3Q17 earnings estimates in Analyzing Halliburton before Its 3Q17 Earnings. Baker Hughes, a GE Company’s (BHGE) 3Q17 adjusted earnings fell short of analysts’ consensus estimates. You can find out more about Wall Street’s expectations in Market Realist’s The Top and Bottom of Oilfield Service Stocks in 3Q17.

Next, let’s take a look at SLB’s growth drivers.