Schlumberger Earnings Cheat Sheet: Profit Drop Breaks Four Consecutive Quarters of Growing Profits

Rising revenue was not enough for S&P 500 (NYSE:SPY) component Schlumberger Limited (NYSE:SLB) as the oil and gas equipment and services company saw profit fall in the third quarter. Schlumberger is a global oilfield services company. Through its subsidiaries, it supplies technology, integrated project management and information solutions to consumers in the oil and gas industry.

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Schlumberger Earnings Cheat Sheet for the Third Quarter

Results: Net income for the oil and gas equipment and services company fell to $1.3 billion (96 cents per share) vs. $1.73 billion ($1.38 per share) a year earlier. This is a decline of 25% from the year earlier quarter.

Revenue: Rose 49.4% to $10.23 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: SLB reported adjusted net income of 98 cents per share. By that measure, the company fell short of mean estimate of $1.01 per share. Analysts were expecting revenue of $10.27 billion.

Quoting Management: Schlumberger CEO Paal Kibsgaard commented, “Schlumberger third-quarter results continued to show solid progress with revenue increasing sequentially across all Schlumberger Product Groups. In North America, performance was driven by strong growth on land in Canada, and in liquids-rich shale basins in the US, while offshore posted solid growth in the deepwater areas of the Gulf of Mexico. Further pricing momentum was seen in wireline- and drilling-related product lines both on land and offshore.”

Key Stats:

The company has enjoyed double-digit year-over-year percentage revenue growth for the past five quarters. Over that span, the company has averaged growth of 50.2%, with the biggest boost coming in the second quarter when revenue rose 62.1% from the year earlier quarter.

Last quarter’s profit decrease breaks a streak of four consecutive quarters of year-over-year profit increases. In the second quarter, net income rose 63.7% from the year earlier, while the figure increased 40.5% in the first quarter, 31% in the fourth quarter of the last fiscal year and more than twofold in the third quarter of the last fiscal year.

The company fell short of estimates last quarter after beating the mark the quarter before with net income of 87 cents versus a mean estimate of net income of 85 cents per share.

Looking Forward: Over the past sixty days, the outlook for the company’s performance next quarter has become increasingly unfavorable. The average estimate for the fourth quarter is $1.19 per share, a drop from $1.21. Over the past three months, the average estimate for the fiscal year has climbed from $3.75 per to share to $3.79.

Competitors to Watch: Halliburton Company (NYSE:HAL), Weatherford Intl. Ltd. (NYSE:WFT), Baker Hughes Incorporated (NYSE:BHI), National-Oilwell Varco, Inc. (NYSE:NOV), Allis-Chalmers Energy Inc. (NYSE:ALY), Complete Production Services, Inc. (NYSE:CPX), Petroleum Geo-Services ASA (PGSVY), TETRA Technologies, Inc. (NYSE:TTI), and Recon Technology, Ltd. (NASDAQ:RCON).

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(Source: Xignite Financials)