Schlumberger N.V.

SLB Details

Schlumberger N.V. (NYSE: SLB), with expertise in more than 120 countries, is a technology company that provides digital solutions and deploys innovative technologies to facilitate performance and sustainability for the global energy industry.

Financial Results for Q2 FY 2022

• SLB has posted revenue of USD6.8 Bn, reflecting an increase of 14% on a sequential basis as well as 20% YoY growth. Notably, its EPS (excluding charges and credits) stood at USD0.50, implying an increase of 47% sequentially and 67% YoY.
• The company’s growth was broad-based, which was driven by higher activity internationally, in North America, as well as throughout all the divisions.
• SLB’s board also approved quarterly cash dividend of USD0.175 per share.
• This quarter was also characterized by the favorable mix of exploration as well as offshore activity and higher impact of improved pricing.

Key Updates

SLB has announced that it has entered into the partnership with Gradiant, which is the global water solutions provider, in order to introduce key sustainable technology into the production process for the battery-grade lithium compounds.

Outlook

Further, the company expects year-on-year revenue growth in 2022 to remain in the high-teens to reach at least USD27 billion. The strength of the company’s second-quarter outperformance reflects the firmly established growth inflection as well as its ability to comprehensively participate in the drilling and completion activity growth globally.

Key Risks

SLB is exposed to competitive risk, and demand risk as the demand for its products and services is largely reliant on the levels of expenditures by its customers.

Valuation Methodology: Price/Earnings Per Share Based Relative Valuation (Illustrative)

Stock Recommendation

Over the last one year, the stock has given a return of ~27.8%. The stock is trading higher than the average price of 52-week low-high range for the stock at USD27.65-USD49.83, respectively.

The stock has been valued using P/E multiple-based illustrative relative valuation, and the target price so arrived reflects a fall of low double-digit (in % terms). A slight discount has been applied to P/E Multiple (NTM) (Peer Average), considering the near-term concerns over a global economic slowdown.

Considering the resistance and target level achievement, current trading levels as well as risks associated, it is prudent to book profits at the current levels.

Hence, a ‘Sell’ rating has been provided on the stock at the current price of USD43.39 per share (Time: 6:54 AM PT) as of 14 October 2022. 

Technical Overview:

Daily Price Chart

Schlumberger N.V. (SLB) is a part of Kalkine’s Global Big Money Product.

Markets are trading in a highly volatile zone currently due to certain macro-economic and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for share price chart is based on October 14, 2022. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

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