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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 impressive record of earnings per share growth. However, as a counter to these strengths, we find that the company's profit margins have been poor overall.
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Highlights from the ratings report include:
- SLB's revenue growth has slightly outpaced the industry average of 4.0%. Since the same quarter one year prior, revenues slightly increased by 8.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The current debt-to-equity ratio, 0.32, 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 1.38, which illustrates the ability to avoid short-term cash problems.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
- 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 currently lower than what is desirable, coming in at 30.23%. 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 18.73% compares favorably to the industry average.
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 $106.4 billion and is part of the basic materials sector and energy industry. Shares are up 16.4% year to date as of the close of trading on Tuesday.
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--Written by a member of TheStreet Ratings Staff.