SLB - Embedded Expectations Analysis - 2019 05 07
Schlumberger Limited (SLB:USA) currently trades above recent averages relative to UAFRS-based (Uniform) Earnings, with a 23.4x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management has concerns about international sales, the performance impact of oil price volatility, and their Drilling Systems and Valves and Measurements profitability.Specifically, management may lack confidence in their ability to sustain sales growth, particularly in Wireline and across Asian and Australian markets, and achieve sequential growth, particularly in the Cameron Group and across international markets. Moreover, they may be concerned about the impact of oil price headwinds on international performance, oil price volatility, and their oil price outlook. Also, they may be concerned about debt levels, the timing of pipeline divestitures, weather-related slowdowns in Australia, and revenue declines in Europe, CIS, and Africa. Finally, they may lack confidence in their ability to sustain book-to-bill ratio improvements, expand Drilling Systems and Valves and Measurements profitability, and improve footage drilled growth, pricing, and profitability in their rotary steerable systems business.
Schlumberger provides technology for reservoir characterization, drilling, production and processing to the oil and gas industry. The company has four segments: Reservoir Characterization, which consists of the principal technologies involved in finding and defining hydrocarbon resources; Drilling, which consists of the principal technologies involved in the drilling and positioning of oil and gas wells; Production, which consists of the principal technologies involved in the lifetime production of oil and gas reservoirs; and Cameron, which consists of the principal technologies involved in pressure and flow control for drilling and intervention rigs, oil and gas wells and production facilities.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.