Oilfield services company SLB, also known as Schlumberger, is set to report its fiscal second-quarter results and is expected to outperform market expectations. The company’s international and offshore markets are experiencing a resurgence of activity, driven by long-cycle development projects. Oil prices are being supported by supply cuts from major producers and continued demand in Europe. However, uncertainties in the Middle East and concerns about a potential economic slowdown in the U.S. could impact SLB’s revenue sources. The company’s stock has declined by 6% year-to-date, while its peer Halliburton has remained relatively flat.
SLB anticipates a seasonal rebound in the Northern Hemisphere and strong international activity in Q2. The company expects significant growth in offshore final investment decisions in the coming years, particularly in the subsea sector. Despite geopolitical tensions and other challenges in certain regions, SLB foresees record investment levels in the Middle East and strong offshore activity in other key markets. The company aims to generate over $4 billion in new subsea bookings by 2025.
SLB’s stock has seen significant gains over the past few years, outperforming the S&P 500 at times but underperforming in other periods. The Trefis High Quality Portfolio, consisting of 30 stocks, has consistently outperformed the S&P 500, highlighting the challenges individual stocks face in outperforming the benchmark index. With uncertainties in the macroeconomic environment, it remains to be seen whether SLB can sustain its growth trajectory or face challenges in the coming months.
The company’s revenues are expected to slightly surpass consensus estimates for Q2, with strong growth in international markets offsetting a decline in North American revenue. SLB’s recent acquisition of ChampionX Corp is expected to strengthen its position in key segments like production chemicals and artificial lift. The company plans to increase shareholder returns in the coming years, providing additional benefits for investors.
SLB’s earnings per share are also projected to come in ahead of expectations for Q2, driven by sustained growth in international markets. The company’s valuation suggests a stock price of $53, which is higher than the current market price. Peers in the industry can provide useful comparisons to assess SLB’s performance. Overall, SLB’s upcoming earnings report and outlook will be closely watched by investors to gauge its future performance in a challenging market environment.
