Schlumberger is
the world’s leading oilfield service company providing wireline, drilling and
measurement and well testing services, completion, artificial lift, data and
consulting services, land and marine seismic services and reservoir
services. The company has grown profits
at an 18% pace over the past ten years; the dividend growth rate has been lower
rate but management has stated that it intends to increase it in the near
term. In addition, the company has
earned an 11-25%+ return of equity over the last ten years. The company should continue to grow at an
above average over the long term as a result of:
(1) its
financial strength and technological leadership positions it to benefit from
increased activity in oilfield services and simulation and completion services,
(2) exploration
and production activities are increasing internationally as well as in the Gulf of Mexico ,
(3) its
Production Management unit is seeing sustained improvement.
Negatives:
(1) intense
competition causing pricing and margin pressures,
(2) commodity
price and currency fluctuations,
(3) geopolitical
risks,
(4) adverse
weather conditions can negatively impact demand.
Schlumberger is
rated A++ by Value Line, carries a debt to equity ratio of about 21%, and its
stock yields of approximately 1.4%.
Statistical Summary
Stock Dividend Payout # Increases
Yield Growth Rate Ratio Since 2004
Ind Ave 2.4 9 32 NA
Debt/ EPS Down Net Value Line
Equity ROE Since 2004 Margin Rating
Ind Ave 27 13 NA 15 NA
Chart
Note:
SLB stock made good initial progress off its March 2009 low, quickly surpassing
the downtrend off its July 2008 high (straight red line) and the November 2008
trading high (green line). Long term the
stock is in an uptrend (blue lines).
Intermediate term it is in a trading range (purple lines). Short term it is in an uptrend (brown line). The wiggly red line is the 50 day moving
average. Both the Dividend Growth and
Aggressive Growth Portfolios own 75% positions in SLB. The upper boundary of its Buy Value Range is
$42; the lower boundary of its Sell Half Range is $119.
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