Four. Five. One. What significance do these numbers hold?

Four is the number of years of uninterrupted year-over-year profits growth for oilfield services company Schlumberger (NYSE:SLB). Five, the number of uninterrupted quarterly "earnings beats." And one? Tomorrow's news starts off quarter No. 1 of a new year in which Schlumberger tries to keep both streaks alive.

What analysts say:

  • Buy, sell, or waffle? Twenty-one analysts try to correctly pronounce Schlumberger. Sixteen of them say buy, and five say hold.
  • Revenues. On average, they're looking for 28% sales growth to $5.4 billion.
  • Earnings. Profits are predicted to rise 52.5% to $0.90 per share.

What management says:
Earlier this month, CEO Andrew Gould addressed investors at the 35th Annual Howard Weil Energy Conference in New Orleans. Without going into too much detail, I'd characterize his comments as basically bullish on the direction of both crude prices and those of natural gas, both in the short and long term, if for different reasons. The key to oil, it seems, is less a rise in demand than problems with supply; specifically, the aging of known oilfields and the increasing difficulty of extracting oil from them. Natural gas, in contrast, seems to be driven both by rising demand for this clean-burning energy source, and by the aging of reservoirs.

Based on these assessments, Gould sees "no slackening in activity before 2010." The proviso being that a major recession could hurt Schlumberger's business by slowing the economy, and thus, demand for the energy to run it. Absent such a recession, Gould predicts that the company will continue to grow revenues in the "high teens" annually through the end of this decade, and more cautiously posits continued "substantial growth" after that.

What management does:
So much for the top line. On the bottom line, how Schlumberger grows its profits will be a function of (1) that "high teen" revenue growth Gould promised, multiplied by (2) whatever margins Schlumberger is able to earn on it. Judging from the trends shown below -- steadily growing profit margins at the gross, operating, and net levels -- we could well be looking at 20% or better profits growth in each of the next few years. For the record, that's what Wall Street analysts project: 21.4% growth per annum over the next five years.





























All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
I certainly understand it when investors get nervous over volatile oil prices, which can shift a few dollars up or down in the course of a single trading day. When volatility threatens, however, Gould's words may reassure you that things will work out just fine, long-term, and that there's no need to abandon a quality oil services stock like Schlumberger -- or rivals Baker Hughes (NYSE:BHI) or BJ Services (NYSE:BJS), for that matter -- on days when oil prices take a short-term plunge. All three of these companies show similar trends of rising profitability. All three should therefore benefit from the rising revenues that Schlumberger is predicting across the industry over the next few years.

Final point: On Schlumberger in particular, the firm's trailing P/E ratio of 25 may look a tad high for a cyclical oil stock. That said, if revenue growth continues as expected, I wouldn't be at all surprised to see profits exceed analyst projections, perhaps by enough to make today's stock price look less "fairly priced" and more "bargain priced" by the end of this decade.

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Fool contributor Rich Smith does not own shares of any company named above. The Fool has a disclosure policy.