With a recent daily loss of 2.45% and a modest 3-month gain of 1.82%, Schlumberger Ltd (SLB, Financial) currently presents an intriguing case for potential investors. The company's Earnings Per Share (EPS) (EPS) stands at 3.01. This analysis seeks to determine whether Schlumberger, with its current market price of $47.43 and a market cap of $67.80 billion, is indeed modestly undervalued as suggested by the GF Value of $56.22.
Company Overview
Schlumberger is the world's largest oilfield services company, known for its comprehensive range of services in reservoir performance, well construction, and production enhancement. With a strong focus on digital solutions, Schlumberger has secured a dominant position in various end markets due to its continuous innovation. The comparison between its current stock price and the GF Value will provide a deeper insight into the company's intrinsic value.
Understanding GF Value
The GF Value is a proprietary measure calculated to represent the true intrinsic value of a stock. It incorporates historical trading multiples, a GuruFocus adjustment factor based on past performance and growth, along with estimates of future business performance. If Schlumberger's stock price is below this line, it suggests that the stock is undervalued, offering potentially higher future returns.
Currently, Schlumberger's stock price of $47.43 is below the GF Value of $56.22, indicating that it is modestly undervalued. This positioning suggests a promising outlook for investors, as the stock price might increase to meet its intrinsic value.
Financial Strength and Stability
Investing in companies with robust financial health reduces the risk of permanent capital loss. Schlumberger's cash-to-debt ratio stands at 0.29, which, although lower than 61.5% of its peers in the Oil & Gas industry, still reflects a fair level of financial strength with a GuruFocus rating of 6 out of 10.
Profitability and Growth
Schlumberger has maintained profitability over the past decade with a robust operating margin of 16.71%, ranking better than 66.53% of its industry counterparts. The company's 3-year average annual revenue growth rate is 10.6%, which, although not leading the industry, shows stable revenue increments.
Moreover, the comparison of Return on Invested Capital (ROIC) at 14.32% against the Weighted Average Cost of Capital (WACC) at 8.15% indicates that Schlumberger is effectively creating value for its shareholders.
Conclusion
Given its current market position, financial health, and profitability, Schlumberger (SLB, Financial) appears to be modestly undervalued. This assessment suggests a potentially favorable long-term investment opportunity as the market price may adjust to reflect its intrinsic value. For a detailed financial overview, consider exploring Schlumberger's 30-Year Financials.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
