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Can Schlumberger (SLB) Beat Estimates This Earnings Season?

Zacks Equity Research
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Schlumberger Limited SLB is scheduled to report first-quarter 2019 earnings on Apr 18, before the opening bell.  

The oilfield service provider has average positive earnings surprise of 1.2% for the last four quarters. Let’s see how things are shaping up prior to this announcement.

Which Way Are Estimates Treading?

Let’s take a look at the estimate revisions to get a clear picture of analyst opinion on the stock before the earnings release.

The Zacks Consensus Estimate for first-quarter earnings per share of 30 cents has remained static over the past seven days. The latest consensus mark reflects a year-over-year decline of 21.1%.

The consensus estimate for first-quarter revenues of $7.9 billion indicates an increase of 0.2% from the year-ago quarter.

What Our Quantitative Model Says

Our proven model shows that Schlumberger is likely to beat estimates in the to-be-reported quarter. This is because it has the right combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold).

Earnings ESP: Schlumberger has an Earnings ESP of +1.96%. This is because the Most Accurate Estimate of 31 cents per share is higher than the Zacks Consensus Estimate of 30 cents. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Zacks Rank: Schlumberger carries a Zacks Rank of 3.

Meanwhile, we caution against Sell-rated stocks (#4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

What is Driving the Better-Than-Expected Earnings?

Schlumberger offers technologies to oil and natural gas explorers for drilling, production, reservoir characterization and processing, which are directly linked to prices. The recovery in oil price (roughly 30% for West Texas Intermediate crude) through the March quarter of 2019 is likely to influence its results.

The favorable business scenario is getting reflected in the Zacks Consensus Estimate for the world’s largest oilfield service provider’s two main operating segments — Reservoir Characterization and Drilling.

The Zacks Consensus Estimate for first-quarter 2019 income before taxes for the Reservoir Characterization segment stands at $337 million, higher than the year-ago pretax operating earnings of $307 million.

For the Drilling unit, the Zacks Consensus Estimate for income, before taxes, for the March quarter of 2019, is pegged at $311 million, up from the year-ago pretax operating income of $293 million.

Other Stocks to Consider

A few other energy stocks with the right combination of elements to come up with an earnings beat this time around are:

ConocoPhillips COP, with an Earnings ESP of +2.26% and a Zacks Rank #1. The company is slated to announce first-quarter earnings on Apr 30. You can see the complete list of today’s Zacks #1 Rank stocks here.

Antero Resources Corporation AR is set to report first-quarter earnings on May 1. The stock has an Earnings ESP of +3.57% and a Zacks Rank of 1.

Royal Dutch Shell plc RDS.A has an Earnings ESP of +12.14% and a Zacks Rank of 3. The company is anticipated to release first-quarter earnings on May 2.

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Schlumberger Limited (SLB) : Free Stock Analysis Report
 
Royal Dutch Shell PLC (RDS.A) : Free Stock Analysis Report
 
Antero Resources Corporation (AR) : Free Stock Analysis Report
 
ConocoPhillips (COP) : Free Stock Analysis Report
 
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