Schlumberger Ltd. (NYSE: SLB) reported stronger-than-expected Q1 results, topping both earnings and revenue estimates. Aided by rising oil prices triggering demand for services and equipment, the performance was driven by robust performance across all segments and regions.
The company also rewarded its shareholders with a 40% hike in quarterly dividends. Following the results, shares of the leading oilfield services company gained 2.5%, but dropped around 3% in the extended trading session.
Q1 Beat
The company reported quarterly earnings of $0.34 per share, two cents higher than analysts’ estimates of $0.32 per share and significantly higher than the earnings of $0.21 per share reported for the prior-year period.
Notably, revenue climbed 14% to $6 billion compared to the prior-year period and outpaced the Street’s estimate of $5.42 billion.
The outstanding revenue growth is attributed to double-digit revenue growth in core services divisions across drilling, evaluation, intervention, and stimulation services, both on land and offshore.
40% Dividend Hike
Based on strong business fundamentals, Schlumberger raised its quarterly dividend by 40% to $0.175 per share. The dividend is payable on July 14 to shareholders on record as of June 1.
CEO Comments
Sharing his views on the current tight oil and gas market, Schlumberger CEO, Olivier Le Peuch, commented, “The confluence of elevated commodity prices, demand-led activity growth, and energy security are resulting in one of the strongest outlooks for the energy services industry in recent times—reinforcing the market fundamentals for a stronger and longer multiyear upcycle—absent a global economic setback.”
He further added, “In this context, energy has never been more essential to the world. Schlumberger, which uniquely benefits from increasing E&P activity and digital transformation, provides the most comprehensive technology portfolio to help customers deliver diverse, cleaner, and more affordable energy. ”
Analysts Recommendation
Overall, the stock has a Strong Buy consensus rating based on 11 unanimous Buys. At the time of writing, the average Schlumberger price target was $50.36, which implies 27.11% upside potential from current levels. Shares of SLB have jumped 58% over the past year.
TipRanks’ Smart Score
SLB scores an 8 out of 10 on TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.
Key Take Away
Schlumberger reported an easy beat and an impressive dividend hike, which resonates with management’s confidence in the company’s leading position and ability to capture meaningful return potential throughout the emerging energy upcycle.
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