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Is Schlumberger’s Stock Price Showing Weakness?

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Schlumberger versus its peers and the industry

Schlumberger (SLB) is the largest US oilfield equipment and services company. Schlumberger’s stock price has weakened in the market in the past year. On February 23, 2018, Schlumberger was trading at $66.50, which is ~17% lower than its price a year ago. In this series, we’ll discuss what’s driving Schlumberger. For a comparison of Schlumberger and Halliburton (HAL), read Schlumberger and Halliburton: A Comparison after 4Q17.

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The Market Vectors Oil Services ETF (OIH) has declined 22% in the past year until February 23, 2018. Schlumberger accounts for 21.0% of OIH. Patterson-UTI Energy (PTEN) has decreased 23% since February 24, 2017, while Core Laboratories’ (CLB) stock price has decreased 4% during the same period. The West Texas Intermediate crude oil price has increased 18% in the past year.

What does the stock price change suggest?

In the past year, Schlumberger’s one-year stock price was the highest in January 2017. Since February 2017, Schlumberger trended down until November 2017. Schlumberger picked up again in January 2018. However, the company has fallen since January. Schlumberger’s quarterly revenues improved in the past four quarters until 4Q17 after falling sharply in 3Q16. Schlumberger’s free cash flow generation improved significantly in the past two quarters until 4Q17. The resurgence of crude oil’s price in the past year drove many oilfield equipment and services companies’ stock prices up. However, Schlumberger’s net loss in 4Q17 and the recent sell-off in the market has taken some of the wind away from the stock.

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Schlumberger’s moving averages

On February 23, 2018, Schlumberger’s stock price was at a 5.6% discount to the 50-day moving average. On February 23, 2018, Schlumberger was trading 1.4% below its 200-day moving average.

Schlumberger’s short-term moving average crossed over the long-term moving average in February 2018. Schlumberger’s stock price has been trading below its long-term moving average since the beginning of February 2018, which indicates that there’s bearishness in Schlumberger’s stock price.

In this series

In this series, we’ll analyze Schlumberger’s drivers, balance sheet, free cash flow, and dividend yield. Next, we’ll start with management’s comments.

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