NEW YORK (TheStreet) -- Schlumberger (SLB) - Get Report stock is rising by 1.97% to $73.36 in afternoon trading on Thursday, following the company's decision not to extend its agreement to buy a minority stake in Eurasia Drilling, when the current extension expires on September 30.
The company was seeking to acquire a 45.65% stake in Eurasia Drilling for about $1.7 billion, allowing the company to eventually own the entire Russian oilfield service company, Reuters reports.
While the Russian anti-monopoly entity endorsed the deal initially, the decision was postponed several times as regulators looked to establish more conditions to the deal, Reuters added.
The oilfield service and equipment provider will instead focus on other merger and acquisition opportunities, Schlumberger said in a statement.
Last month, Schlumberger agreed to acquire Cameron International (CAM) in a $14.8 billion dollar deal creating a company with about $59 billion in annual revenues.
Separately, TheStreet Ratings team rates SCHLUMBERGER LTD as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate SCHLUMBERGER LTD (SLB) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. 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. We feel its strengths outweigh the fact that the company has had somewhat weak growth in earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The current debt-to-equity ratio, 0.35, 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 1.22, which illustrates the ability to avoid short-term cash problems.
- SLB, with its decline in revenue, slightly underperformed the industry average of 22.3%. Since the same quarter one year prior, revenues fell by 25.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The gross profit margin for SCHLUMBERGER LTD is currently lower than what is desirable, coming in at 31.54%. 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 12.47% compares favorably to the industry average.
- The change in net income from the same quarter one year ago has exceeded that of the Energy Equipment & Services industry average, but is less than that of the S&P 500. The net income has significantly decreased by 29.5% when compared to the same quarter one year ago, falling from $1,595.00 million to $1,124.00 million.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 27.12%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 35.76% compared to the year-earlier quarter. Looking ahead, the stock's sharp decline over the past year may have been what was needed in order to bring its value into alignment with its fundamentals and others in its industry.
- You can view the full analysis from the report here: SLB