Schlumberger Ltd. (NYSE: SLB), doing business as SLB, is known as an oil services company in the oils/energy sector, especially when its customers include massive oil giants like Aramco, Exxon Mobil Co. (NYSE: XOM) and Chevron Co. (NYSE: CVX). It competes with other oil services giants like Halliburton Co. (NYSE: HAL) and Baker Hughes Co. (NASDAQ: BKR).
However, the world’s largest oil services company has been leveraging digital technologies to optimize its client's operations and decision-making. While they have a long-standing position as a traditional oil services leader, they are increasingly using technology to differentiate themselves as an advanced solutions provider. They are also growing their revenue base internationally, which now accounts for 80% of total revenue.
Energy Security Replaces Decarbonization in The United States
Like with most industries, the energy industry is seeing the potential of artificial intelligence (AI) applications. President Trump’s return to the White House and his “Drill, baby, drill” policy has swapped out decarbonization with energy security.
AI Integration Through Platforms and Autonomous Drilling
SLB has embraced AI and has integrated it into its offerings, like its flagship Lumi Data and AI Platform, which converts energy data into intelligence and insights. Their Delfi Digital Platform is a 24/7 cloud-based exploration and production (E&P) workflow platform used for more efficient well planning and reservoir modeling. Performance Live centers enable remote operations and the achievement of fully autonomous drilling. Its 2024 Digital & Integration revenue rose 10% YoY, reaching $2.44 billion, driven by the 20% growth in digital.
SLB CEO Olivier Le Peuch stated, “AI is the X factor for our industry, and I am confident that SLB will continue to be a leader in this area, enabling us to deliver sustained outperformance for our customers, partners and shareholders.”
Delivering Solid Top and Bottom-Line Beats
For its fourth quarter, 2024, SLB reported EPS of 92 cents, up 3% QoQ and 7% YoY, beating consensus estimates by 2 cents. Revenues climbed 3.3% YoY to $9.28 billion, firmly beating the $9.18 billion consensus estimates. Operating cash flow was $2.39 billion, and free cash flow was $1.63 billion.
Full-Year Results Sets the Stage of Long-Term Outperformance
For the full year of 2024, SLB reported GAAP EPS of $3.11, which is up 7% YoY. The full year's net income was $4.46 billion, which is up 6% YoY. Adjusted EBITDA was $9.07 billion, up 12% YoY. Full-year operating cash flow was $6.6 billion, and free cash flow was $3.99 billion. International revenue rose 12% YoY, led by the Middle East & Asia and Europe & Africa, which grew 18%, hitting a new record and 13%, respectively. The acquired Aker subsea business bolstered Europe & Africa revenues. Backing out the acquired business, international revenue rose by 7% YoY, outperforming the rig count over the same period.
Committing to Shareholders With Raised Dividend and Stock Buyback
CEO Le Peuch added, "SLB remains committed to expanding EBITDA margins, generating strong cash flows, and increasing returns to shareholders. Given our confidence in the business outlook and our ability to continue generating strong cash flows, we are pleased to announce that our Board of Directors has approved a 3.6% increase to our quarterly dividend.”
Le Peuch also added, “Additionally, as we believe our stock is undervalued relative to the strength of our business, we entered into accelerated share repurchase (ASR) transactions to repurchase $2.3 billion of our company's common stock. This positions us to increase total return to shareholders from $3.3 billion in 2024 to a minimum of $4 billion in 2025."
SLB Completes a Cup Pattern, Awaiting the Handle
A cup and handle pattern is comprised of 2 separate patterns: a cup and a handle. The cup is formed as a stock peaks a swing high, marking the lip line as shares fall to a swing low, form a rounding bottom, and rally back to retest the cup lip line. After the cup pattern is complete, the stock rejects again from the lip line to form a shallow pullback before returning to retest the cup lip line, forming the handle. The cup and handle breakout occurs if the stock can break out above the cup lip line on the handle bounce and in the third attempt.
SLB formed the cup lip line at $44.70 on Nov 25, 2024, as shares fell to a swing low near the $36.60 Fib. SLB staged a rally back up to retest the cup lip line at $44.70 on Jan 21, 2025. Shares pulled back to the $41.39 Fib as it attempted to coil, which would be the handle formation. The daily anchored VWAP support sits at $39.88. The daily RSI is slowly rising at the 58-band. Fib pullback support levels are at $41.39, $39.69, $37.68 and $35.08.
SLB stock’s average consensus price target is 31.66% higher at $55.81, and its highest analyst price target sits at $71.00. It has 17 analysts' Buy ratings and five Hold Ratings. The stock has a 3.54% short interest.
Actionable Options Strategies: Bullish investors can consider using cash-secured puts at the Fib pullback support levels to buy the dip. If assigned the shares, then writing covered calls at upside Fib levels executes a wheel strategy for income in addition to the 2.59% annual dividend yield.
The article "SLB: Pioneering the Shift from Oil Services to Tech Solutions" first appeared on MarketBeat.
