How Schlumberger Earnings Could Stay Ahead of Halliburton and Baker Hughes

Schlumberger gives its report on the oil-services industry, but will it grow faster than rivals Halliburton and Baker Hughes? Find out here.

Jan 15, 2014 at 2:04PM

Schlumberger (NYSE:SLB) will release its quarterly report on Friday, and after having risen to multiyear highs early in the quarter, the stock has eased off somewhat in recent months. Yet the big question investors are facing right now is whether Schlumberger earnings will be able to grow faster than Baker Hughes (NYSE:BHI) and Halliburton (NYSE:HAL), especially in light of changing conditions in the oil and natural-gas markets that could have a big impact on production activity in the near future.

Schlumberger has profited immensely from the explosive growth in oil and gas exploration and production activity in recent years, with reasonably high energy prices and a vast wealth of new finds helping to drive greater revenue. Yet the growth in the industry has encouraged more entrants to stake their claims for the profits that are potentially available, forcing even industry leaders like Schlumberger to work harder to defend their turf and maintain their levels of business activity. Let's take an early look at what's been happening with Schlumberger over the past quarter and what we're likely to see in its report.

Photo credit: Flickr/nestorgalina

Stats on Schlumberger

Analyst EPS Estimate


Change From Year-Ago EPS


Revenue Estimate

$12.01 billion

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance

Will Schlumberger earnings do better this quarter?
In recent months, analysts have had mixed views on Schlumberger earnings, cutting their fourth-quarter estimates by $0.03 per share but boosting their full-year 2014 projections by $0.02 per share. The stock has topped out after bigger advances earlier in 2013, remaining roughly flat since mid-October.

Schlumberger's third-quarter results showed just how much profit potential there is in energy services right now. Net income jumped 20% on an 11% gain in overall revenue, with international growth playing an especially vital role in Schlumberger's favorable performance. Like Baker Hughes, Schlumberger saw strong growth in the Middle East, with Saudi Arabia, Iraq, Qatar, and the UAE all helping to boost sales. Other parts of Asia also contributed to Schlumberger's growth, including land-based drilling in China and offshore activity in Indonesia and Malaysia.

Going forward, Schlumberger intends for its global reach to give it a sustained competitive advantage over Halliburton and Baker Hughes. The company believes that in addition to the Middle East, areas like Russia, Australia, and sub-Saharan Africa all have great potential to provide new growth opportunities. China also represents a chance for Schlumberger to shine, with both it and Halliburton having moved aggressively to help Chinese production companies benefit from the production methods that Schlumberger has developed in other areas of the world. Moreover, Schlumberger isn't leaving North America untapped, even though Halliburton and Baker Hughes pose larger competitive threats there.

Still, tensions in certain parts of the world have weighed on Schlumberger. For instance, in Iraq, violence between the company and Shiite workers has led to concerns about the company's contract in the region, and Baker Hughes has seen similar difficulties. If Schlumberger doesn't navigate its geopolitical risk more effectively, it could open the door to Halliburton and other rivals to take over lucrative opportunities in conflict-ridden areas. In particular, the successful U.S. negotiations with Iran could lead to further destabilization in the region, especially if Iran's political ambitions continue to have an impact on Iraqi conflict.

In the Schlumberger earnings report, watch for continued signs of whether the oil services giant's best results are coming from, as well as where the company identifies its most promising prospects. By using all of its reach, Schlumberger has the best chance to hold Halliburton and Baker Hughes at bay for the foreseeable future.

Look beyond Schlumberger as well
Schlumberger has benefited from the record oil and natural gas production that have revolutionized the United States' energy position. But finding even better plays while historic amounts of capital expenditures are flooding the industry will pad your investment nest egg. For this reason, the Motley Fool is offering a comprehensive look at three energy companies set to soar during this transformation in the energy industry. To find out which three companies are spreading their wings, check out the special free report, "3 Stocks for the American Energy Bonanza." Don't miss out on this timely opportunity; click here to access your report -- it's absolutely free. 

Click here to add Schlumberger to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends Halliburton. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information