Schlumberger (SLB) Stock Gains as DOJ Clears Cameron Acquisition
NEW YORK (TheStreet) -- Schlumberger (SLB) - Get Report stock is gaining 1.43% to $77.84 in early morning trading on Wednesday after the Department of Justice approved the $14.8 billion acquisition of Cameron International Corp. (CAM).
Cameron stock is advancing 2.03% to $68.51 this morning.
On Tuesday after the market close, the companies announced the clearance was granted without any conditions.
The acquisition is still pending approval from Cameron shareholders, which will hold a special meeting on December 17 to consider the proposal.
Schlumberger agreed to pay 0.716 shares of Schlumberger common stock and $14.44 in cash for each Cameron share in August.
After the acquisition closes, Schlumberger expects synergies of $300 million and $600 million for the first and second year, respectively.
The transaction is on track to close in the first quarter of 2016.
Houston-based Schlumberger supplies technology, project management and information solutions to the oil and gas industries.
Cameron, also based in Houston, provides flow equipment products, systems and services to the same industries.
Separately, TheStreet Ratings team rates SCHLUMBERGER LTD as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
We rate SCHLUMBERGER LTD (SLB) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. Among the primary strengths of the company is its solid financial position based on a variety of debt and liquidity measures that we have evaluated. At the same time, however, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- SLB, with its decline in revenue, slightly underperformed the industry average of 30.8%. Since the same quarter one year prior, revenues fell by 33.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Despite currently having a low debt-to-equity ratio of 0.32, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.14 is sturdy.
- The gross profit margin for SCHLUMBERGER LTD is currently lower than what is desirable, coming in at 30.97%. Regardless of SLB's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, SLB's net profit margin of 11.67% compares favorably to the industry average.
- The share price of SCHLUMBERGER LTD has not done very well: it is down 21.38% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- SCHLUMBERGER LTD's earnings per share declined by 47.6% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, SCHLUMBERGER LTD reported lower earnings of $4.30 versus $5.11 in the prior year. For the next year, the market is expecting a contraction of 21.7% in earnings ($3.37 versus $4.30).
- You can view the full analysis from the report here: SLB
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.