Schlumberger Scorecard Reveals Likely Neutral Position

Edited by Juna Yanoyan

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The model rates stocks from 1 to 10, with 10 being the best using a system of advanced mathematics to determine a stock’s expected risk and return. I am using different fundamental and technical factors in order to rank a stock.Intrinsic value of the stock.

Intrinsic Value

Investors should buy stocks selling at a discount to their intrinsic value, and then patiently wait for the fair value of their investments to be realized.

SLB’s intrinsic value is $75.49, the current price is $71.60.

Financials

The financial health of the company the higher the better.

Investor Sentiment

This is the investor’s sentiment for the stock.

Analyst Ratings

The model assigns a value according to analyst’s recommendation for the stock.

Earnings Consistency

According to this model, each year’s EPS numbers should be better than the previous year’s. One dip is allowed, but the following year’s earnings should be a new high.

SLB’s annual EPS before extraordinary items for the last 5 years (from earliest to the most recent fiscal year) were 4.20, 4.42, 2.61, 3.38, 3.51, fails this criterion, as earnings dipped.

Quarterly EPS Change (This Quarter VS. Same Quarter Last Year)

The EPS growth for this quarter relative to the same quarter a year earlier for SLB is 27.16%. This is above the minimum 18% that this model likes to see for a “good” growth company. Furthermore, growth from Q5 to Q1 beat estimates, for this year and next, by more than 25%. This is considered extremely upbeat.

Annual Earnings Growth

This model looks for annual earnings growth above 15%, but prefers higher than 25%.

SLB’s annual earnings growth rate over the past five years of 3.12%, which is at the bottom of the range.

Current Price Level

Investors should keep an eye open for stocks that are trading within 10% of their 52-week highs, as it is likely to continue in its upward trend.

SLB’s 52 week high is $80 while, current price is $71.45

P/E Ratio

The Price/Earnings (P/E) ratio is based on the greater of the current PE or the PE using average earnings over the last 3 fiscal year. This must be “moderate”, which in this model states is not greater than 15. Stocks with moderate P/Es are more defensive by nature.

SLB’s P/E is 17.81 times, above the moderate level of P/E.

Insider Ownership

When there is strong insider ownership which I define as 12% or more, management is more likely to act in the best interest of the company, as their interests are right in line with that of the shareholders.

Insiders own 0.21% of SLB’s stock. Management’s representation is not large enough.

Technical Analysis

I am using several technical indicators (MACD, RSI, position Indicators) to forecast the trend of the stock for 6 and 12 months, and assign a value.

RECOMMENDATION for next 6 months: NEUTRAL on Schlumberger following its impressive third quarter results. The company was bolstered by strong performances in global exploration and deepwater activity, as well as efficiency in operations. Its results were driven by higher-than-expected revenue and margins in the Europe/CIS/Africa region, partially offset by weak results in North America. Also, Schlumberger faces a number of headwinds, including changes in exploration and production spending patterns, commodity price fluctuations and global economic conditions
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