SLB Schlumberger Ltd

The world’s largest oilfield services provider Schlumberger Ltd. (SLB) is scheduled to report its fourth quarter and full year 2011 results on January 20, 2012, before the opening bell.

The Zacks Consensus Estimate for the to-be-reported quarter is a profit of $1.10 per share on revenues of $10.8 billion. For the full year, our earnings per share projection is $3.65 on revenues of $39.4 billion.

Third Quarter 2011 Recap

Schlumberger’s third-quarter 2011 results were lower than expected with earnings per share of 98 cents per share (excluding special items) missing the Zacks Consensus Estimate of $1.01. However, the quarter’s results showed a steady improvement from the year-earlier profit of 70 cents per share.

Revenue of $10.23 billion also missed the Zacks Consensus Estimate of $10.27 billion, but grew an impressive 49.4% over the year-earlier figure of $6.85 billion.

(Read our full coverage on this earnings report: Schlumberger Misses Ests, Grows YY)

Agreement of Analysts

Analysts exhibit a cautious sentiment for Schlumberger in the upcoming quarter based on a bearish pressure pumping margins, commodity price fluctuations and weak macro backdrop. 

For the fourth quarter, out of the 24 analysts covering the stock, 3 analysts have lowered their estimates, while none raised their estimates in the last 30 days. In the last 7 days, only 2 analysts have revised the estimate downward while none of the analysts moved in the opposite direction.

For fiscal year 2011, 4 analysts (out of 27 analysts) decreased their estimates and one analyst has increased its projection over the past one month. In the last seven days, 2 analysts have lowered the estimate and one analyst raised it.  

Magnitude of Estimate Revisions

Taking into effect the analysts’ earnings revision, the Zacks Consensus Estimate for the fourth quarter dropped to $1.10 from $1.12 recorded 30 days back. For the full year estimate went down by a penny to $3.65 per share, over the last one month.

However, for the past one week, the Consensus Estimate for both the quarter and full year remained static.

Surprise History

The company has a history of mixed earnings surprises, surpassing/lagging the Zacks Consensus Estimate in each of the last 4 quarters. The company recorded a minimum surprise of negative 7.8% in first quarter 2011 while a maximum of 10.4% in fourth quarter 2010. On an average, the earnings surprise stood at 0.5%.

Our Recommendation

Schlumberger shares currently retain a Zacks #3 Rank, which translates into a short-term Hold rating. We are also maintaining our long-term Neutral recommendation on the stock.

We believe Schlumberger is favorably positioned to operate within the current oilfield services scenario, givenacceleration in international drilling activity, pricing improvements and an expected recovery in its seismic operations.

However, the oilfield services sector’s biggest player continues to remain under pressure due to intense competition, depressed natural gas prices and the expected curtailment in incremental drilling projects.

Schlumberger operates within the ‘Oil & Gas Equipment & Services’ industry, which comprises other players such as Halliburton Company (HAL) and Baker Hughes Incorporated (BHI).

 
BAKER-HUGHES (BHI): Free Stock Analysis Report
 
HALLIBURTON CO (HAL): Free Stock Analysis Report
 
SCHLUMBERGER LT (SLB): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research