SLB N.V. Q3 Preview: Analysts see muted quarter with softer earnings

[Oil pumps and wind mill during sunset.]
Torsten Asmus

SLB N.V. (NYSE:SLB [https://seekingalpha.com/symbol/SLB]) is projected to see a nearly 25% decline in its third-quarter earnings, which the company is due to report on October 17, before market open.

The consensus EPS Estimate is $0.67 [https://seekingalpha.com/symbol/SLB/earnings/estimates], while revenue is likely to fall 26% year-on-year to $8.92 billion. Over the last 3 months, EPS estimates have seen 17 downward revisions while revenue estimates have seen 6 upward revisions and 11 downward moves.

Analysts at RBC Capital Markets expect a neutral to slightly positive setup heading into the Q3 print. They see the company posting stable Q3 results but without any significant announcements.

“SLB stock has been devoid of near-term catalysts, which these results are unlikely to change. Segregated Digital business disclosures should be incremental, but unlikely to be needle-moving in the near-term,” analysts led by Keith Mackey said.

However, going ahead, the company’s expanding digital platform positions it to deliver stronger financial returns in a capital-disciplined oil and gas market, they said. Its Transition Technologies portfolio and expanding energy transition capabilities are also likely to support future revenue growth.

RBC issued an Outperform rating for the stock on the back of higher-than-expected commodity prices and the firm’s stronger-than-expected pricing for services, among other reasons.

However, the brokerage lowered its price target from $46 to $43 over risks associated with reduced industry activity, which it says could weigh on SLB’s results; tariff threats and government regulations or sanctions. RCB is also cautious about the capital invested in the New Energy portfolio, which it says may not realize return on capital metrics.

In the year so far, the stock has declined 14.45%, underperforming the wider markets. Over the last 2 years, SLB has beaten EPS estimates [https://seekingalpha.com/symbol/SLB/earnings/eps-surprise-summary] 88% of the time and has beaten revenue estimates 63% of the time.

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