Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
NEW YORK (
) has been reiterated by TheStreet Ratings as a hold with a ratings score of C. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income and poor profit margins.
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Highlights from the ratings report include:
- SLB's revenue growth has slightly outpaced the industry average of 7.8%. Since the same quarter one year prior, revenues slightly increased by 8.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The current debt-to-equity ratio, 0.33, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.43, which illustrates the ability to avoid short-term cash problems.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Energy Equipment & Services industry and the overall market on the basis of return on equity, SCHLUMBERGER LTD has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- The gross profit margin for SCHLUMBERGER LTD is rather low; currently it is at 21.30%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, SLB's net profit margin of 12.19% compares favorably to the industry average.
- The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Energy Equipment & Services industry average. The net income has decreased by 3.5% when compared to the same quarter one year ago, dropping from $1,413.00 million to $1,363.00 million.
Schlumberger Limited, together with its subsidiaries, engages in the supply of technology, integrated project management, and information solutions to oil and gas exploration and production industries worldwide. Schlumberger has a market cap of $93.1 billion and is part of the basic materials sector and energy industry. The company has a P/E ratio of 17.00, below the S&P 500 P/E ratio of 18.00. Shares are up 2.8% year to date as of the close of trading on Monday.
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--Written by a member of TheStreet Ratings Staff.
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