At an investor conference the company said it expects EPS to increase at a compound annual growth rate of 17% to 20%. Earlier in the day RBC Capital analyst Kurt Hallead wrote that the Street expected annual EPS growth of 15%.
Schlumberger said it can achieve $9 to $10 EPS through revenue growth, margin expansion, and share repurchases. Hallead predicted the company's EPS would reach $8 by 2016.
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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. 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, solid stock price performance, impressive record of earnings per share growth and good cash flow from operations. We feel these strengths outweigh the fact that the company shows low profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Despite its growing revenue, the company underperformed as compared with the industry average of 11.2%. Since the same quarter one year prior, revenues slightly increased by 6.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The current debt-to-equity ratio, 0.31, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, SLB has a quick ratio of 1.58, which demonstrates the ability of the company to cover short-term liquidity needs.
- Powered by its strong earnings growth of 34.44% and other important driving factors, this stock has surged by 46.59% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, SLB should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- SCHLUMBERGER LTD has improved earnings per share by 34.4% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, SCHLUMBERGER LTD increased its bottom line by earning $5.11 versus $3.91 in the prior year. This year, the market expects an improvement in earnings ($5.69 versus $5.11).
- Net operating cash flow has increased to $1,635.00 million or 46.11% when compared to the same quarter last year. Despite an increase in cash flow, SCHLUMBERGER LTD's average is still marginally south of the industry average growth rate of 49.55%.
- You can view the full analysis from the report here: SLB Ratings Report
Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.