Shares of Schlumberger (NYSE:SLB) have recently got a boost following the company's investor conference, where Schlumberger outlined impressive growth targets for the next few years. Meanwhile, shares of peers, Halliburton (NYSE:HAL) and Baker Hughes (NYSE:BHI), trade at a discount to Schlumberger. Will Halliburton and Baker Hughes be able to close the gap with their bigger rival?

Schlumberger targets are impressive
Schlumberger targets $9-$10 earnings per share in 2017, which implies a compound annual earnings growth rate between 17% and 20%. The company believes that a mix of top line growth, margin expansion and share buybacks will allow Schlumberger to successfully meet its ambitious target. What's more, Schlumberger states that free cash flow will reach more than 75% of its reported earnings.

Schlumberger has recently dominated Halliburton and Baker Hughes on the free cash flow front, and is determined to sustain its position. Despite Schlumberger's huge size, the company manages to deliver decent growth levels. In fact, as the oil industry favors integrated solutions, Schlumberger's size is its advantage.

Shareholders are always interested in the ways capital will be returned to them, and Schlumberger has something to offer on this front. During the last ten years, the company has on average returned 25% of its earnings in the form of dividends and 33% of earnings in the form of buybacks. Going forward, this distribution is going to be roughly the same, as Schlumberger plans to return 60% of earnings to shareholders.

Assumptions look modest, and that's good
Schlumberger based its earnings targets on modest assumptions for oil industry growth. The company sees oil demand increasing between 1% and 1.5% per year, fueled by demand from emerging markets. According to Schlumberger, the capital spending from oil companies is going to increase at lower rates than before but still average 6%-7% per year. This looks like a plausible figure, as the decline in spending by international oil companies is somewhat offset by increased spending by smaller independent producers.

Schlumberger continues to bet on conventional oil, which makes up a larger part of its business. The company believes that unconventional producers in North America cannot bear higher costs. Thus, pricing for unconventional services in the region could remain subdued. In turn, both Halliburton and Baker Hughes expressed optimism about the state of the North American markets during their first quarter earnings call. Notably, the big picture on the market was muted because of the harsh winter weather, so we will get a better feel on what exactly is going on when the companies report their second-quarter earnings in the middle of July.

Bottom line
The premium that investors pay for Schlumberger shares increased after the company published its ambitious growth targets. Most likely, this premium will continue to exist as Schlumberger enjoys higher margins and bigger free cash flow in comparison to Halliburton and Baker Hughes. However, this does not limit the upside for Schlumberger's peers. Despite the recent focus on improving returns by international oil companies, the spending on exploration and production continues to grow. The big picture for oil services companies looks bright, and thus there is still upside for oil services stocks.