Which Oil Services Stocks Have the Strongest Earnings Trends?

Earnings trends are extremely important when evaluating stocks. At Wall St. Cheat Sheet, we view increasing earnings quarter-over-quarter as a simple way to gauge whether costs and the business model are stable. Then we like to analyze whether the company is outperforming peers in the sector. This is what we call the “E-Squared” investment analysis (‘E = Earnings Are Increasing Quarter-Over-Quarter’ + ‘E = Excellent Relative Performance Versus Peers and Sector’).

Stocks with improving earnings metrics are worthy of your extra attention. Click here to discover our CHEAT SHEET stock picks now!

Here’s your Cheat Sheet to how the top 5 oil services stocks rank via earnings trends:

Schlumberger Limited (NYSE:SLB): Current Price $76.50

Fiscal Year 2008 2009 2010 2011 2012
Revenue ($) in millions 27,580 22,980 28,930 39,670 42,320
Diluted EPS ($) 4.45 2.59 3.38 3.67 4.10

Schlumberger has done well after 2009 and has steadily improved their top line and EPS every year since.

Next, our CHEAT SHEET investing framework asks us to drill down to the recent quarterly data:

Quarter Dec. 31, 2011 Mar. 31, 2012 Jun. 30, 2012 Sep. 30, 2012 Dec. 31, 2012
Revenue ($) in millions 12,320 10,660 10,490 10,650 11,210
Diluted EPS ($) 1.04 0.97 1.05 1.07 1.02

The quarterly show, however, has not kept pace. Sales were higher during the last quarter, but profits dropped a bit…

Transocean Ltd. (NYSE:RIG): Current Price $55.78

Fiscal Year 2007 2008 2009 2010 2011
Revenue ($) in millions 6,377 12,670 11,440 9,466 9,142
Diluted EPS ($) 14.08 12.53 9.84 2.99 -17.79

This does not look good. EPS has plunged every year for the last four years, and the company finally landed in the red in 2011.

Next, let’s take a look at the recent quarterly data:

Quarter Sep. 30, 2011 Dec. 31, 2011 Mar. 31, 2012 Jun. 30, 2012 Sep. 30, 2012
Revenue ($) in millions 1,991 2,673 2,331 2,575 2,440
Diluted EPS ($) -0.10 -19.04 0.12 -0.86 -1.06

Things are dismal on the quarterly front, and we see a negative EPS during the last two quarters. Best avoid this one…

Halliburton (NYSE:HAL): Current Price $37.50

Fiscal Year 2007 2008 2009 2010 2011
Revenue ($) in millions 15,260 18,280 14,680 17,970 24,830
Diluted EPS ($) 3.65 2.45 1.27 2.01 3.08

The last two years have gone well for Halliburton, with both revenue and EPS growing nicely.

Quarter Sep. 30, 2011 Dec. 31, 2011 Mar. 31, 2012 Jun. 30, 2012 Sep. 30, 2012
Revenue ($) in millions 6,548 7,064 6,868 7,234 7,111
Diluted EPS ($) 0.74 0.98 0.68 0.79 0.65

But it’s quiet on the quarterly front, with both revenue and EPS essentially flat. We’ll look elsewhere…

Baker Hughes Incorporated (NYSE:BHI): Current Price $44.30

Fiscal Year 2007 2008 2009 2010 2011
Revenue ($) in millions 10,430 11,860 9,664 14,410 19,830
Diluted EPS ($) 4.73 5.30 1.36 2.06 3.97

A strong performance from Baker Hughes during the last two years, with both revenue and EPS more than doubling from 2009 levels.

Quarter Sep. 30, 2011 Dec. 31, 2011 Mar. 31, 2012 Jun. 30, 2012 Sep. 30, 2012
Revenue ($) in millions 5,064 5,501 5,355 5,326 5,228
Diluted EPS ($) 1.61 0.72 0.86 1.00 0.63

Unfortunately, quarterly profits are down, and sales are flat. Not the best candidate here…

National Oilwell Varco, Inc. (NYSE:NOV): Current Price $72.76

Fiscal Year 2007 2008 2009 2010 2011
Revenue ($) in millions 9,789 13,430 12,710 12,160 14,660
Diluted EPS ($) 3.76 4.90 3.52 3.98 4.70

Sales and EPS have improved in 2010 and 2011, though EPS is still below the 2008 level.

Quarter Sep. 30, 2011 Dec. 31, 2011 Mar. 31, 2012 Jun. 30, 2012 Sep. 30, 2012
Revenue ($) in millions 3,740 4,259 4,303 4,734 5,319
Diluted EPS ($) 1.25 1.36 1.42 1.42 1.43

Sales have been rising every quarter through this period, which is encouraging. Unfortunately, EPS has basically remained flat, though it rose a bit in September 2012.

Conclusion

Of the lot, National Oilwell Varco carries the honors due to its stellar quarterly sales performance and steady EPS trend.

“E = Earnings Are Increasing Quarter-Over-Quarter” is a core component of our successful CHEAT SHEET investing framework. Don’t waste another minute – click here to discover our CHEAT SHEET stock picks now!