Schlumberger Limited. (SLB), Halliburton Company (HAL): Growth In Oil Services

The debt-to-equity ratio for Schlumberger is 31 and the company has a total cash position of approximately $5.6 billion. Schlumberger Limited. (NYSE:SLB) also maintains a healthy current ratio of about 1.9. With EPS expected to grow at an average annual rate of 17% over the next five years and the stock trading at PEG (five year expected) of 0.9, I believe the stock offers a huge potential upside.

A word on Halliburton and Baker Hughes

Halliburton Company (NYSE:HAL) generates the highest percentage of its revenue through North American rig services at around 56%. This is followed by rig services in Europe and Africa at around 15%. Rig services from Latin America, the Middle East and Asia contribute approximately 28% to overall revenue.

It has market cap of $39 billion, and according to Trefis rig services in North America account for approximately 66% of Halliburton’s stock price. This is indicative of Halliburton Company (NYSE:HAL)’s dependence on the North American region.

Similarly, Baker Hughes Incorporated (NYSE:BHI) also generates the highest percentage of its revenue through rig services in North America at around 51%. This is followed by rig services in the Middle East and Europe at around 15% and 17%, respectively.

The remaining portion of its revenue is generated through rig services in Latin America. According to Trefis stock-price estimates, rig services in North America account for 51% of Baker Hughes’s stock price.

In contrast, rig services in North America account for 29% of Schlumberger Limited. (NYSE:SLB)’s overall stock price. This is indicative of Halliburton Company (NYSE:HAL) and Baker Hughes’ higher dependence on the North American region.

What should investors Remember?

Schlumberger is levered to fundamental growth drivers in the oil-services industry. Furthermore, the company’s international portfolio can lead to higher revenue growth and margin expansion compared to other US oil-services companies (international E&P investments exceed those in North America.) I believe Schlumberger Limited. (NYSE:SLB)’s strong fundamentals and attractive valuation offer credible potential upside and stable returns.

The article Benefits of Investing in Oil Services originally appeared on Fool.com and is written by Kiran Gulati.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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

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

Top 10 Highest Paying Jobs 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!