Shares of SLB (NYSE: SLB) are expected to trade higher following the company’s fiscal first quarter results, which are set to be reported on April 19. Analysts anticipate that revenues and earnings for SLB will slightly exceed market expectations due to a strong resurgence of activity in international and offshore markets. Factors such as supply cuts from Saudi Arabia and Russia, as well as steady demand in Europe, have contributed to a more favorable environment for oil prices. However, concerns about a potential economic slowdown in the U.S. could impact short-term demand.
SLB projects revenue growth in the low teens year-over-year for Q1, with EBITDA growth in the mid-teens. The company anticipates further acceleration of growth in the second half of fiscal year 2024, driven by a seasonal activity bounce in Q2 and over $100 billion in global offshore final investment decisions in 2024-25. SLB expects international revenues to grow at a mid-teens percentage rate in fiscal year 2024, while North American revenues are forecasted to rise at a mid-single-digit rate. The company remains optimistic about future investment levels in the Middle East and continued strong offshore activity in various regions.
Despite experiencing significant gains in its stock price, SLB has not consistently outperformed the S&P 500 in recent years. Returns for SLB were 37% in 2021, 78% in 2022, but dipped to -3% in 2023. In comparison, the S&P 500 saw returns of 27% in 2021, -19% in 2022, and 24% in 2023. The Trefis High Quality Portfolio, consisting of 30 stocks, has consistently outperformed the S&P 500 over the same period, offering better returns with less risk. The uncertain macroeconomic environment, characterized by high oil prices and elevated interest rates, raises questions about whether SLB will face challenges in outperforming the market in the coming year.
Trefis estimates that SLB’s Q1 2024 revenues will reach $8.8 billion, slightly surpassing consensus estimates. The company’s top line growth in Q4 was driven by a strong performance in its International segment, with revenue increasing 18% year-over-year to $7.29 billion. North American revenue remained flat at $1.6 billion, reflecting reduced drilling activity in the region. Segment-wise, Well Construction revenues rose 6% to $3.4 billion, Production Systems revenues surged 33% to $2.9 billion, and Reservoir Performance revenues increased 12% to $1.7 billion. For full-year FY 2024, SLB is forecasted to achieve revenues of $37.3 billion, a 13% year-over-year increase.
SLB’s earnings per share for Q1 2024 are expected to come in at 77 cents according to Trefis analysis, slightly ahead of consensus estimates. In Q4 2023, the company’s net income rose to $1.11 billion, or $0.77 per share, from $1.07 billion, or $0.74 per share, in the same quarter of the previous year. The company’s valuation suggests a price of $58 per share, representing a 13% premium over the current market price. Investors can use comparisons with SLB’s peers to assess its performance and position in the industry. By analyzing metrics that matter, investors can make informed decisions about their investments.
