How Will Schlumberger (SLB) Stock React To Economic Sanctions Against Russia?

NEW YORK (TheStreet) -- Shares of Schlumberger  (SLB) are down -0.94% to $108.18 after the oil field services company said that U.S. and European economic sanctions against Russia over the Ukraine crisis will have a limited impact on the its third quarter financial results, the Wall Street Journal reports.

The company said it estimates the impact on its earnings at three cents a share. Analysts project per share earnings of $1.51, according to Thomson Reuters.

"The sanctions are placing some restrictions on the engagement of certain people and equipment in our Russian operations, which in the short term will have an impact on operational efficiency and costs in Russia," Schlumberger said.

 

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 number of 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, notable return on equity, solid stock price performance and good cash flow from operations. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • SLB's revenue growth trails the industry average of 20.6%. Since the same quarter one year prior, revenues slightly increased by 7.8%. 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. To add to this, SLB has a quick ratio of 1.55, which demonstrates the ability of the company to cover short-term liquidity needs.
  • 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.
  • Compared to its closing price of one year ago, SLB's share price has jumped by 32.02%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • SCHLUMBERGER LTD's earnings per share declined by 17.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. 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 ($5.71 versus $5.11).
  • You can view the full analysis from the report here: SLB Ratings Report

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