SLB Shares Surge on Solid Earnings Result Amid Market Dynamics

Shares of Schlumberger Limited (SLB), the world's largest oilfield services provider, surged on Friday after the company reported solid fourth-quarter earnings and revenue that topped Wall Street estimates. The stock jumped 3.3% to $42.48 during market action on Friday, after climbing 1% to $41.09 on Thursday. SLB stock has gained more than 7% in January and is looking to move above its 50-day moving average for the first time since early December.



The oilfield services giant saw Q4 EPS grow 7% to 92 cents with sales increasing 3% to $9.28 billion. Analysts expected earnings of 90 cents per share and revenue totaling $9.18 billion, according to FactSet. Revenue rose 3% to $9.28 billion, clearing analyst targets by $100 million, thanks to higher activity in the Middle East, Europe, and North America. SLB logged higher revenue in every region it serves except Latin America.



The company's adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) also beat estimates, largely from gains in its digital and integration business, as well as lower corporate taxes. TD Cowen analysts said in a research note that the digital and integration business contributed significantly to the company's strong performance.



Chief Executive Olivier Le Peuch said in the earnings report that upstream investment growth is expected to remain subdued in the short term due to global oversupply, but the imbalance should gradually abate. SLB is well positioned as energy demand for AI and data centers ramps up and energy security becomes a bigger focus around the world, the CEO said.



That confident outlook prompted SLB's board to raise its quarterly dividend by 3.6% to 28.5 cents a share, due to be paid out in early April. SLB said it has also entered into accelerated share-repurchase transactions to buy back $2.3 billion of its shares. About 80% of those shares were repurchased earlier this week, and the rest will be bought back by the end of May, said the company.



Le Peuch said SLB's stock is undervalued relative to the strength of its business. The company is looking to return at least $4 billion to shareholders this year, up from $3.3 billion in 2024, it said.



SLB's optimism comes as President-elect Donald Trump prepares to issue executive orders aimed at boosting American fossil fuels. Despite the incoming administration's pro-drilling stance, oilfield services companies are still expected to see a flattish year ahead, Raymond James analysts James Rollyson and Connor Jensen said in a recent research note. Capital expenditure budgets released by large operators so far suggest that activity could be flat or even decline, the analysts said.



In conclusion, SLB's strong earnings performance and positive outlook have driven the stock's recent surge. The company's digital and integration business, as well as its commitment to returning value to shareholders, have contributed to its overall financial performance. Despite market dynamics and potential challenges, SLB remains well-positioned to capitalize on growing demand for AI and data centers, as well as increased energy security. Investors should keep a close eye on SLB's stock performance and potential opportunities in the oilfield services sector.