Should I buy Schlumberger shares after Q4 results?

By: Stanko Iliev
Stanko Iliev
Stanko dedicates himself to providing investors with relevant information they can use to make investment decisions. He loves the… read more.
on Jan 22, 2022
  • Schlumberger reported strong fourth-quarter results
  • Total revenue has increased by 12.5% Y/Y
  • Schlumberger lowered its debt

Schlumberger Limited (NYSE: SLB) shares have advanced more than 20% since the beginning of 2022 year, and the company reported strong fourth-quarter results this Friday.

Schlumberger lowered its debt

Schlumberger Limited supplies technology for reservoir characterization, drilling, production, and processing to the oil and gas industry worldwide.

Are you looking for fast-news, hot-tips and market analysis? Sign-up for the Invezz newsletter, today.

The company reported strong fourth-quarter results this Friday; total revenue has increased by 12.5% Y/Y to $6.22 billion, $130 million above expectations, while the non-GAAP earnings per share were $0.41 (beats by $0.02).

Fourth-quarter earnings per share excluding charges and credits have increased by $0.05 compared to the previous quarter, while EBITDA margin remained strong at 22.2%.

All divisions posted sequential growth, led by Digital & Integration, North America revenue grew 13%, and it is important to mention that international revenue grew 5%.

Digital & Integration revenue of $889 million increased 10%, mainly due to higher digital and exploration data licensing sales.

Reservoir Performance revenue of $1.3 billion increased 8% Y/Y while Well Construction revenue increased 5% and reached $2.4 billion in the fourth quarter. Finally, Production Systems revenue of $1.8 billion was up 5% sequentially, largely from new offshore projects and year-end sales.

Schlumberger generated $4.7 billion of cash flow from operations and $3 billion of free cash flow for the full fiscal year, which helped it to end the year with net debt of $11.1 billion.

Schlumberger lowered its debt by $2.8 billion compared to the end of 2020, and as a result of this, net debt is now at its lowest level of the last five years. CEO Olivier Le Peuch added:

Looking ahead into 2022, the industry macro fundamentals are very favorable due to the combination of projected steady demand recovery, an increasingly tight supply market, and supportive oil prices. We believe this will result in a material step-up in industry capital spending with simultaneous double-digit growth in international and North American markets.

Fundamentally looking, Schlumberger trades at approximately ten times TTM EBITDA, and with a market capitalization of $51.9 billion, shares of this company are not expensive.

Schlumberger’s balance sheet remains stable, the current dividend yield is around 1.4%, and shares of this company could provide strong returns for long-term investors.

Technical analysis

Data source: tradingview.com

Rising above $40 resistance supports the positive trend, and the next price target could be around $43.

On the other side, if the price falls below $35 support, it would be a “sell” signal, and we have the open way to $30.

Summary

Schlumberger reported strong fourth-quarter results this Friday, and according to CEO Olivier Le Peuch, the industry macro fundamentals remain very favorable. Total revenue has increased by 12.5% Y/Y to $6.22 billion in the fourth quarter, and Schlumberger lowered its debt by $2.8 billion compared to the end of 2020.

Where to buy right now

To invest simply and easily, users need a low-fee broker with a track record of reliability. The following brokers are highly rated, recognised worldwide, and safe to use:

  1. Etoro, trusted by over 13m users worldwide. Register here >
  2. Capital.com, simple, easy to use and regulated. Register here >

*Cryptoasset investing is unregulated in some EU countries and the UK. No consumer protection. Your capital is at risk.