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Is a Beat in Store for Schlumberger's (SLB) Q3 Earnings?

Zacks Equity Research
·3 min read

Schlumberger Limited SLB is set to report third-quarter 2021 results on Oct 22, before the opening bell.

In the last reported quarter, the company’s earnings of 30 cents per share beat the Zacks Consensus Estimate of 26 cents owing to increased offshore exploration in Guyana and Angola. Robust activities in North American and international markets contributed to the positives.

The oilfield service major beat the Zacks Consensus Estimate for earnings in the prior four reported quarters, delivering an earnings surprise of 17.8%, on average. This is depicted in the graph below:

Schlumberger Limited Price and EPS Surprise

Schlumberger Limited Price and EPS Surprise
Schlumberger Limited Price and EPS Surprise

Schlumberger Limited price-eps-surprise | Schlumberger Limited Quote

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Let’s see how things have shaped up prior to the upcoming earnings announcement.

Trend in Estimate Revision

The Zacks Consensus Estimate for third-quarter earnings per share of 36 cents has seen three upward revisions and zero downward movement in the past 30 days. The figure indicates an increase of 125% from the year-ago quarter.

Further, the Zacks Consensus Estimate for revenues of $5.9 billion suggests a 12.8% rise from the prior-year quarter.

What the Quantitative Model Suggests

Our proven model predicts an earnings beat for Schlumberger this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat.

Earnings ESP: Schlumberger has an Earnings ESP of +1.02%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Zacks Rank: Schlumberger currently carries a Zacks Rank #2.

Factors Driving the Better-Than-Expected Earnings

Compared with the September quarter of 2020, the price of oil has recovered significantly, thanks to the rolling out of coronavirus vaccines at a massive scale. Higher oil prices provided incentives to explorers and producers to return to shale plays, improving demand for oilfield services. Being a leading oilfield service player, Schlumberger is likely to have benefited from the favorable business scenario.

The company is a leading provider of certain products and services that aid upstream players in maximizing drilling efficiency and improving wellbore assurance. Schlumberger provided these services and products through its Well Construction unit and hence is likely to have generated higher cashflows, given a massive recovery in exploration and production activities. The Zacks Consensus Estimate for its third-quarter 2021 pretax operating income from the Well Construction unit is pegged at $309 million, suggesting a sequential increase from $272 million.

Recovery in exploration and production operations is also likely to aid the company’s Production Systems segment. This is because, through this business unit, the company helps its clients in boosting production and recovery from subsurface reservoirs to the surface. The Zacks Consensus Estimate for its third-quarter 2021 pretax operating income from the Production Systems unit is pegged at $188 million, suggesting a sequential increase from $171 million.

Other Stocks That Warrant a Look

Here are some other firms that you may want to consider as these too have the right combination of elements to post an earnings beat in the upcoming quarterly reports:

ConocoPhillips COP has an Earnings ESP of +1.22% and is a Zacks #1 Ranked player. The company is scheduled to release third-quarter results on Nov 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

BP plc BP has an Earnings ESP of +11.62% and a Zacks Rank of 1. It is scheduled to report third-quarter results on Nov 2.

Callon Petroleum Company CPE has an Earnings ESP of +3.28% and a Zacks Rank #2. The firm is scheduled to release third-quarter earnings on Nov 3.


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BP p.l.c. (BP) : Free Stock Analysis Report

Schlumberger Limited (SLB) : Free Stock Analysis Report

ConocoPhillips (COP) : Free Stock Analysis Report

Callon Petroleum Company (CPE) : Free Stock Analysis Report

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Zacks Investment Research