Schlumberger Limited SLB is slated to report its first quarter 2020 earnings on April 17, before the opening bell.
As for earnings surprises, the Houston, Texas-based company is on a solid foundation as it has beaten the Zacks consensus estimate twice and has equaled it in two of the last four quarters, with an average surprise positive by 3.2%. This is represented in the following graph:
Schlumberger limited price and EPS surprise
Schlumberger Limited eps-surprise price | Schlumberger Limited quotation
In the last quarter, the company's earnings of 39 cents per share exceeded Zacks' consensus estimate of 37 cents, thanks to the increase in performance of Surface Systems, Drilling Systems and OneSubsea on international markets , along with strong sales of SIS digital software.
Let's see how things went before the announcement.
Review estimate trend
Zacks' consensus estimate for first quarter earnings per share has dropped from 28 to 25 cents in the past 30 days. The figure indicates a decrease of 16.7% compared to the quarter of the previous year.
In addition, the Zacks consensus estimate for revenues of $ 7.6 billion suggests a 3.6% drop over the prior year quarter.
Factors to consider
With US explorers and producers spending cautiously in the first quarter due to volatile crude oil prices, Schlumberger is expected to have generated lower revenues from oilfield maintenance operations, as it helps upstream energy operators to create wells efficiently oil.
Oil prices were trading in bearish territory, especially in the last two months of the quarter, in the wake of weak global energy demand due to the outbreak of the coronavirus. The lowest price was recorded in the last month of the first quarter of 2020, as OPEC and Russia failed to reach an agreement on oil production cuts due to the pandemic. The weak commodity price scenario mainly prompted US drillers to remove drilling rigs from oil and gas resources. This could have damaged the company's drilling activity. Zacks' consensus estimate for three of its major business segments also suggests the same.
The Zacks consensus estimate for pre-tax Drilling earnings is $ 235 million, implying a decline from $ 307 million in the prior year quarter. Additionally, for the production unit, Zacks' consensus estimate for pre-tax earnings is $ 194 million, suggesting a drop from $ 217 million in the prior year quarter. In addition, Zacks' consensus estimate for pre-tax earnings from the Cameron segment is $ 98 million, which indicates a drop from $ 137 million in the prior year quarter.
However, the Zacks consensus estimate for earnings in the pre-tax tank characterization segment was $ 299 million, indicating growth from $ 293 million in the prior year quarter.
Whispers of earnings
This time our tried and tested model does not definitively foresee a profit for Schlumberger. This is because a stock must have both a positive earnings ESP and a Zacks Rank # 1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here, as you will see below.
ESP earnings: ESP earnings represents the difference between the most accurate estimate and the Zacks consensus estimate. Schlumberger has an ESP on earnings of -10.00% as the most accurate estimate stands at 23 cents, while the Zacks consensus estimate is set at 25 cents. You can discover the best stocks to buy or sell before they are reported with our ESP revenue filter.
Zacks Rank: Schlumberger currently has a Zacks Rank # 3.
Actions to consider
While Schlumberger seems uncertain about the earnings beat, here are some Energy companies you might consider, as our model shows that these have the right combination of elements to post a earnings beat in upcoming quarterly reports:
Murphy USA Inc. MUSA has a + 44.49% profit ESP and is a ranked player. 2 of Zacks. The company is expected to publish the first quarter results before the market opens on April 17. Here you can see the complete list of Zacks n. 1 today.
Comstock Resources, Inc. CRK has an ESP on earnings of + 22.73% and a Zacks ranking of 2. The results of the first quarter are expected to be reported on May 6th.
EQT Corporation EQT has an ESP on profits of + 42.40% and holds a Zacks level no. 3. He is likely to report first quarter results soon.
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