SLB SLB is likely to see earnings growth of 38.1% and 25% in 2023 and 2024, respectively. The Zacks Consensus Estimate for earnings for the firm’s 2023 and 2024 earnings are pegged at $3.01 per share and $3.76, respectively.
What’s Favoring the Stock?
West Texas Intermediate crude is currently trading at more than $70 per barrel mark, reflecting a favorable business scenario for exploration and production activities. Higher upstream operations will likely increase demand for well construction and completion activities, which is beneficial for SLB.
The Zacks Rank #3 (Hold) company has projected revenue growth of more than 45% by 2025 from the 2022 levels. The energy major expects its EBITDA to grow more than 60% over the same time frame, suggesting that its earnings related to operations will improve more than the top line through the mentioned period. Olivier Le Peuch, SLB's chief executive officer, offered the updates at the Bernstein Strategic Decisions Conference.
This reflects that SLB is confident its overall operations will continue to grow on its technology differentiation and integration capability. In its core business related to oil and gas operations, SLB anticipates the continuation of remarkable growth from upcycle dynamics. Amid tight supply in service capacity, the oilfield service major is being able to create favorable pricing through value creation. Based on all these positive developments, SLB expects upcycle associated with its core business to continue through 2025 and beyond. On the back of its innovations, it is also assured of driving decarbonization in the long term.
While SLB’s business is dependent on upstream operations, the extreme volatility in commodity prices could adversely impact its business. Also, SLB has higher exposure to debt capital than composite stocks belonging to the energy sector.
Stocks to Consider
Better-ranked players in the energy space include Murphy USA Inc. MUSA, Sunoco LP SUN and Dril-Quip, Inc. DRQ. While Dril-Quip carries a Zacks Rank #2 (Buy), Sunoco and Murphy USA sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Murphy USA is a leading retailer of gasoline. MUSA has more than 1,700 stores and has witnessed upward earnings estimate revisions for 2023 earnings in the past seven days.
Sunoco, a distributor of motor fuel to approximately 10,000 convenience stores, has a stable business model. For this year, SUN has witnessed upward earnings estimate revisions in the past 30 days.
Dril-Quip is a leading provider of highly engineered equipment, service and innovative technologies that are being employed in the energy sector.
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