Is Schlumberger Limited. (SLB) a Good Stock to Buy?

Page 1 of 2

Schlumberger Limited. (NYSE:SLB), the largest publicly traded U.S. oilfield services company by market capitalization (at $110 billion), recently reported its results for the second quarter of 2013. The company saw an 8% increase in revenue versus a year earlier, which was in line with the growth of its business from Q1. The 10-Q recorded a significant gain for Schlumberger Limited. (NYSE:SLB) on the formation of a joint venture specializing in subsea oil and gas services; if the results are adjusted for that and for a significant impairment charge last quarter then pretax income ends up rising 13% compared to the prior year period. About half of the company’s cash flow from operations in the first half of the year has gone to capital expenditures with most of the rest going to dividends and share repurchases.

The stock currently trades at 18 times trailing earnings, as investors expect profits to continue to grow in the future- possibly helped by the ongoing boom in oil and gas development in the onshore U.S., as well as continued triple-digit oil prices. Schlumberger Limited. (NYSE:SLB)’s buyback activities could also supplement earnings growth and generate steeper growth in earnings per share. Wall Street analysts are expecting the company to earn $5.74 per share next year, making for a forward P/E of 14. It should be noted that the connection between drilling activity and oil prices, and therefore to the overall economy, results in Schlumberger Limited. (NYSE:SLB) carrying a beta of 1.8.

Schlumberger Limited. (NYSE:SLB)At Insider Monkey, we track quarterly 13F filings from hundreds of hedge funds and other notable investors as part of our work developing investment strategies; we have found, for example, that the most popular small cap stocks among hedge funds earn an average excess return of 18 percentage points per year (learn more about our small cap strategy). We can also consult this database to find individual managers who liked particular stocks as of the end of Q1. It turns out that billionaire Steve Cohen’s SAC Capital Advisors reported a position of 1.2 million shares in Schlumberger Limited. (NYSE:SLB) at the beginning of April (find Cohen’s favorite stocks). Renaissance Technologies, founded by billionaire Jim Simons, was buying the stock in the first quarter of 2013 (see Renaissance’s stock picks).

The closest peer for Schlumberger Limited. (NYSE:SLB) is Halliburton Company (NYSE:HAL), considered a major player in the industry even though it is somewhat smaller with a market cap of $43 billion. Halliburton recently pled guilty to destroying evidence and settled with the Justice Department; with this uncertainty removed from the stock price it rose 4% on the day.

Page 1 of 2
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The Best B-Boy Movies

Most Awesome Hip Hop Documentaries

Foods That Stain Your Teeth

Richest Doctors in the World

The Best Movie Sountracks Ever

The Highest Grossing Musicals on Broadway

The Most Successful Reality TV Stars

Cheapest Cities to Visit in the US

Most Expensive Summer Camps

Most Expensive Animals in the World

Most Expensive Specialty Crops in the World

Movies That Took Ages to Make

The Longest Hollywood Films Ever Made

Most Expensive Concert Stages

The Richest Bands of all Time

10 Most Corrupt Countries 2013 List

10 Countries with the Highest Quality of Life Index

Most Expensive Mattresses in the World

5 Smallest Countries by Land Area

The Ultimate Heartbreak Songs

Richest Teenagers in the World

10 Most Haunted Places in America

10 Best Places to Retire in Florida East Coast

Top 10 Places to See Before You Die

Top 8 Countries in the World Where Justice Prevails

10 Richest States in America

15 Wealthiest Countries in the World

Richest Singers in the World

Most Expensive Tasting Menu in New York City

Most Expensive Baby Items in the World

Most Expensive Hotel Suites in Vegas

Most Expensive Brunch in New York City

Most Expensive Beef Cuts in the World

25 Best Colleges to Get a Job

Top 10 US Supermarkets

The 25 Most Dangerous Cities in the World to Visit

Most Expensive Xbox Games

Top 11 Cities Where Billionaires Live

Top 10 Most Charitable Companies in America

Most Expensive Seafood in the World

The 10 Wildest Conspiracy Theories

The 10 Best Job Markets in the US

Top 10 Accounting Scandals of All Time

The 25 Biggest Cities in the World

Top 10 Best Paying Virtual Jobs

Most Expensive Leather Shoes in the World

Top 6 Things to Buy in March

The 10 Most Stressful Jobs in America – 2014 List

Top 10 Jobs for Introverted People

Top 10 Honeymoon Destinations in the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!