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Schlumberger Ltd SLB

Rating as of

Morningstar’s Analysis

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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Stewardship

PREMIUM

Schlumberger's Q3 Results Improve Due to Cost-Cutting

Preston Caldwell Equity Analyst

Analyst Note

| Preston Caldwell |

Schlumberger reported third-quarter revenue down 2%, but adjusted operating margins jumped to 8% from 4% in the prior quarter. Partly this was an artificial boost due to asset write-offs, which lowered depreciation and amortization expense, but EBITDA margins (unaffected by the write-offs) also increased to 19% from 16%. The main cause of the improved profitability was execution of management's plan to cut $1.5 billion in fixed costs. Our fair value estimate and narrow moat rating are unchanged following the results.

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Company Profile

Business Description

Schlumberger is the world’s largest supplier of products and services to the oil and gas industry. The company operates its business via multiple groups: reservoir characterization, drilling, production, and Cameron. It is investing more than any other services firm to make its offerings more bundled, which it believes is likely to be one of the key industry trends during the next 10 years. Efforts on this front are most visible via the Schlumberger Production Management business, which now accounts for 10% of its revenue.

Contact
5599 San Felipe, 17th Floor
Houston, TX, 77056, Curaçao
T +1 713 513-2000
Sector Energy
Industry Oil & Gas Equipment & Services
Most Recent Earnings Sep 30, 2020
Fiscal Year End Dec 31, 2020
Stock Type
Employees 105,000

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