On Tuesday, UBS reaffirmed its Buy rating and $67.00 price target for Schlumberger Limited (NYSE:SLB), a leading company in the energy services sector. Schlumberger reported its second-quarter earnings for 2024, delivering an adjusted earnings per share (EPS) of $0.85, which surpassed both UBS's and the Street's expectations of $0.82 and $0.83 respectively.
The company's earnings beat was attributed to stronger-than-anticipated margins. Schlumberger's adjusted EBITDA margin reached 25%, exceeding the 24.6% and 24.4% margins forecasted by UBS and the Street. This performance reflects the company's operational efficiency and ability to exceed financial predictions.
In North America, Schlumberger experienced a quarterly revenue increase of 3%, with robust activity in the Gulf compensating for the softer U.S. land activity. Internationally, the company's revenue growth exceeded 5% quarter-over-quarter across all regions. Notably, more than half of Schlumberger's international geographic units achieved record revenue levels, indicating a widespread and robust international market presence.
Looking ahead, UBS projects that Schlumberger's Drilling & Measurements (D&I) margins will continue to improve throughout the second half of 2024. Additionally, the firm anticipates that shareholder returns will begin to increase in 2025. Based on these strong financial results and positive outlook, UBS maintains Schlumberger as its Top Pick in the Energy Services industry.
In other recent news, SLB reported robust second-quarter earnings, exceeding expectations with earnings before interest, taxes, depreciation, and amortization (EBITDA) of $2.288 billion. The company's adjusted earnings per share (EPS) came in at 85 cents, beating the consensus of 83 cents. These figures reflect strong international growth, with revenues 1% higher than consensus estimates. SLB also announced significant collaborations with TotalEnergies (EPA:TTEF), including a contract for a 13-well Subsea Production System and related services for the Kaminho project in Angola's Kwanza Basin.
TD Cowen, RBC Capital, and Citi have all shown confidence in SLB, with TD Cowen raising the company's price target to $64.00 and maintaining a Buy rating, while RBC Capital and Citi maintained their respective price targets of $69.00 and $62.00. These positive ratings followed SLB's strong second-quarter performance and forward-looking strategies.
However, SLB's proposed acquisition of ChampionX, valued at $7.75 billion, has been delayed due to a second request for more information from the U.S. Department of Justice. These are the recent developments in the company's operations.
InvestingPro Insights
As Schlumberger Limited (NYSE:SLB) continues to demonstrate robust financial performance, real-time data from InvestingPro underscores the company's strengths. With a market capitalization of $70.2 billion and a P/E ratio standing at 16.01, Schlumberger is valued attractively relative to its earnings. Moreover, the company's revenue has shown notable growth over the last twelve months as of Q2 2024, with a 12.68% increase, signaling a strong position in the energy services sector.
InvestingPro Tips suggest caution, as 17 analysts have revised their earnings downwards for the upcoming period, and the stock is trading at a high P/E ratio relative to near-term earnings growth. However, these concerns are balanced by the fact that Schlumberger has maintained dividend payments for 54 consecutive years, with a current dividend yield of 2.22%, and a 10% dividend growth in the same period. Additionally, the company operates with a moderate level of debt and has been profitable over the last twelve months, reassuring investors of its financial health.
For those interested in deeper analysis and additional insights, InvestingPro offers more tips on Schlumberger. By using the coupon code PRONEWS24, readers can get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription. With this subscription, investors can access a total of 8 InvestingPro Tips for Schlumberger, which could further inform investment decisions. Visit https://www.investing.com/pro/SLB for a comprehensive investment analysis.
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