Will Schlumberger (SLB) Miss This Earnings Season? - Analyst Blog

Leading oilfield services company, Schlumberger Limited SLB is set to report first-quarter 2014 results on Apr 17. Let's see how things are shaping up prior to the announcement.

In the last quarter, the company's earnings of $1.35 per share increased approximately 30% year over year from $1.04. The results were boosted by the company's strong international exposure and focus on execution and integration capabilities. Also, the results were ahead of the Zacks Consensus Estimate of $1.33.

Growth Factors this Past Quarter

Schlumberger expects first-quarter 2014 earnings per share EPS to be higher year over year. The bullishness of the company stems from higher market share and an improving cost structure. In a smart move, the company targeted state-owned and independent energy companies that are spending significantly to develop shale and other resources around the world, rather than multinational energy companies, most of which are cutting spending.

Schlumberger's optimism on rising rig count activity will likely lead to increased international spending on exploration, higher production and stepped up activity in the U.S. Gulf of Mexico. The company also expects steady growth in the key regions of Sub-Sahara Africa, Russia, the Middle East, China and Australia.

Schlumberger generates about two-thirds of its revenues internationally, marking the highest ratio among the biggest oilfield service providers, which include Halliburton Company HAL. Schlumberger's strength also lies in effective implementation, strong contracts and new technologies.

The oilfield services behemoth believes that strong leverage to the deepwater segment will help it to perform well over the coming years. While the company makes most of its money outside North America, it bears the brunt of industry-wide weakness in U.S. hydraulic fracturing services as well as softness in the land coiled-tubing business.

Earnings Whispers?

Our proven model does not conclusively show that Schlumberger is likely to beat earnings this quarter because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for that to happen. It is not the case here, as you will see below.

Zacks ESP: The Earnings ESP for Schlumberger is 0.00% since the Most Accurate estimate stands at $1.20, in line with the Zacks Consensus Estimate.

Zacks Rank: Schlumberger's Zacks Rank #3 (Hold) has little effect on the predictive power of ESP because this rank when combined with a 0.00% ESP makes surprise prediction difficult.

Other Stocks to Consider

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter.

Helmerich & Payne Inc. HP, earnings ESP of +2.72% and a Zacks Rank #1 (Strong Buy).
 
Pioneer Energy Services Corp. PES, earnings ESP of +33.33% and a Zacks Rank #1.