Leading oilfield services company, Schlumberger Limited (SLB) is set to report its third-quarter 2014 results on Oct 16, after the market closes.
In the last quarter, the company’s earnings of $1.37 per share increased 19.1% year over year from $1.15. The results were aided by the company’s increased activity both offshore and in key land markets. The growth was the strongest internationally, as activities gained momentum in a number of regions. This was partially offset by the Canadian spring break-up.
Will Schlumberger impress in the upcoming release after combating the challenges witnessed by the company? Let’s see what factors might have influenced the earnings report this time around.
Past Quarter Flashback
Schlumberger’s overall outlook for the remainder of 2014 remains largely unchanged from its earlier projections. The company remains more or less unperturbed although the main economies such as China, the U.S. and the Eurozone witnessed mixed fortunes in the third quarter. As a result, both oil and gas prices also are witnessing some volatility in pricing, reflecting the mixed nature of the global economy.
Looking forward, Schlumberger’s optimism on rising rig count and customer activity will likely lead to its 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 key regions that include Sub-Sahara Africa, Russia, the Middle East, China and Australia.
The oilfield services behemoth believes that strong leverage to the deepwater segment will aid it performance over the coming years. While the company makes the 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.
Schlumberger’s activities during the quarter proved inadequate to win analysts’ confidence. As a result, the Zacks Consensus Estimate declined to $1.47 from $1.49 per share over the last 30 days.
Earnings Whispers
Our proven model does not conclusively show that Schlumberger is likely to beat the Zacks Consensus Estimate in the third quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy) or at least 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, this is not the case here as elaborated below.
Zacks ESP: The Earnings ESP for Schlumberger is -0.68%. This is because the Most Accurate estimate and the Zacks Consensus Estimate stand at $1.46 and $1.47, respectively.
Zacks Rank: Schlumberger has a Zacks Rank #3 (Hold). While this increases the predictive power, we need to have a positive ESP to be confident about an earnings surprise.
We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies you may want to consider as our model shows these have the right combination of elements to post an earnings beat this quarter.
Enbridge Energy Management LLC (EEQ) has Earnings ESP of +25.93% and a Zacks Rank #1 (Strong Buy).
Tallgrass Energy Partners, LP (TEP) has Earnings ESP of +6.67% and a Zacks Rank #1.
Delek Logistics Partners, LP (DKL) has Earnings ESP of +5.56% and a Zacks Rank #1.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment