Schlumberger Stock Is Climbing After an Earnings Beat and Dividend Increase. Why Shares Could Keep Rising.
Work on the floor section of a drilling rig. Schlumberger’s earnings topped expectations.
Photograph by Kosuke Okahara/Bloomberg
Schlumberger stock was rising after the oil-services company reported consensus-topping first-quarter earnings and raised its dividend.
For the March quarter, Schlumberger delivered adjusted earnings of 34 cents a share, slightly higher than the consensus estimate of 33 cents, according to a survey of analysts tracked by FactSet. Revenue of $5.96 billion was more than the $5.91 billion analysts had expected.
Growth was driven by its core divisions: Well Construction and Reservoir Performance. The Well Construction segment, which delivered a 24% year-over-year revenue increase, provides products to optimize well placement. Reservoir Performance consists of services that improve reservoir productivity and generated 21% more in revenue in the quarter. Both segments exceeded consensus.
Schlumberger (ticker: SLB) also announced a 40% increase in its quarterly cash dividend, from $0.125 per share to $0.175 per share. With the increase, Schlumberger is “signifying a positive outlook for earnings/cash flow trajectory,” writes Wells Fargo analyst Roger Read.
Its stock rose 2.4% to $41.56 in premarket trading on Friday. The stock has gained over 35% this year, through Thursday’s close, thanks to the rise in oil prices.
The company noted the uncertainty linked to Russia but maintained its outlook for full-year revenue growth in the midteens. Analysts expect $25.98 billion in revenue for the full year 2022, which translates to 13.3% growth compared with last year.
J.P. Morgan analyst Christyan Malek argued that Schlumberger could be one of the biggest beneficiaries of increased spending on oil production given its international market exposure.
“We believe lost Russian barrels will need to be compensated for by investing in increased productive capacity elsewhere internationally,” he said in a note. “Schlumberger’s revenue mix now ~80% international …and [it has] a portfolio geared to the types of long-cycle projects we think are likely going to be required to satisfy global oil demand,” he added. Malek, who has Schlumberger on the firm’s best ideas list, has an Overweight rating and $43 price target on the stock.
Out of 31 analysts tracked by FactSet, 26 are bullish on the stock, while five rate it a Hold. The average target for the stock price is $47.95.
Write to Karishma Vanjani at [email protected]
