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Schlumberger (SLB) Stock Jumps 54.6% YTD: More Room to Run?

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·3 min read
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Shares of Schlumberger Limited SLB have surged 54.6% year to date (YTD) compared with the industry’s 16.2% growth. The Zacks Rank #3 (Hold) stock is likely to see year-over-year earnings growth of 44.5% and 42.4%, respectively.

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Zacks Investment Research


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Let’s discuss the factors related to the stock’s price appreciation.

What’s Favoring the Stock?

West Texas Intermediate crude price, trading at more than $110 per barrel, has increased drastically in the past year. The sharp rise in oil price can be hitched to the assumptions by many analysts that the Ukraine war may be prolonged.

High oil price is beneficial for exploration and production activities, which will lead to increased demand for oilfield services since oilfield service players help drillers efficiently set up oil and gas wells. Schlumberger, a leading oilfield service player, is well-positioned to capitalize on the mounting demand.

With the expectation that upstream business remains favorable, Schlumberger will likely generate significant cash flows from North American and International operations. Schlumberger reported strong results for the March quarter of this year, thanks to the robust drilling activities in North America, Latin America and the Middle East. Higher evaluation and intervention activities across the international offshore markets also buoyed the company’s first-quarter results.

Although there is room for further price appreciations, one of the factors partially hindering the stock price rally is Schlumberger’s exposure to more debt capital compared with composite stocks belonging to the industry.

Stocks to Consider

Some better-ranked players in the energy space are ConocoPhillips COP, Marathon Oil MRO and Occidental Petroleum OXY. While ConocoPhillips carries a Zacks Rank #2 (Buy), Marathon Oil and Occidental Petroleum sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Considering production and reserves, ConocoPhillips is one of the leading exploration and production players in the global market. COP witnessed upward earnings estimate revisions for 2022 and 2023 in the past 30 days.

In 2022, ConocoPhillips is likely to see an earnings growth of 141.6%.

Marathon Oil is a leading oil and natural gas exploration and production company. MRO witnessed upward earnings estimate revisions for 2022 and 2023 in the past 30 days.

In 2022, Marathon Oil is likely to see an earnings growth of 201.3%.

In the United States, Occidental Petroleum is among the largest oil producers. OXY witnessed upward earnings estimate revisions for 2022 and 2023 in the past 30 days.

In 2022, Occidental Petroleum is likely to see an earnings growth of 278.8%.


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Schlumberger Limited (SLB) : Free Stock Analysis Report
 
ConocoPhillips (COP) : Free Stock Analysis Report
 
Marathon Oil Corporation (MRO) : Free Stock Analysis Report
 
Occidental Petroleum Corporation (OXY) : Free Stock Analysis Report
 
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