Is Schlumberger (SLB) Undervalued Amid Energy Sector Growth?

The energy sector is at a crossroads, with traditional oil and gas operators navigating the dual forces of energy transition and AI-driven operational efficiency. Schlumberger (SLB), the global oilfield services giant, has long been a bellwether for the industry's health. As of November 2025, SLB's valuation appears to offer a compelling case for undervaluation, driven by a stark contraction in its price-to-earnings (P/E) ratio and resilient earnings performance. For long-term investors, this could represent a rare opportunity to capitalize on a company poised to benefit from both energy transition and technological innovation.

A P/E Ratio in Sharp Decline

SLB's current P/E ratio of 13.91 stands in stark contrast to its 10-year average of 46.94, a 70% drop that underscores a significant discount to historical norms. This divergence suggests that the market may be underestimating SLB's long-term prospects, particularly as the company integrates its recent acquisition of ChampionX and invests in digital transformation. While some sources report a lower 10-year average of 14.81, the broader 46.94 figure reflects a more comprehensive historical context, highlighting the magnitude of the current valuation gap. For investors, this discrepancy raises questions about whether the market is overcorrecting to short-term challenges or undervaluing SLB's structural advantages.

Earnings Momentum and Strategic Resilience

SLB's third-quarter 2025 results provided a glimmer of optimism. The company reported adjusted earnings per share of $0.69, beating analyst estimates by $0.02, a rare feat in a sector marked by volatility. While GAAP EPS fell to $0.50-a 40% year-on-year decline-adjusted EBITDA held steady at $2.06 billion, and free cash flow reached $1.10 billion. These figures reflect the company's ability to maintain profitability despite a 3% year-on-year revenue decline. The resilience was driven by its digital segment and the $579 million in revenue from the ChampionX acquisition, which is now contributing meaningfully to growth.

Moreover, SLB's management signaled confidence in its strategic direction, approving a quarterly dividend of $0.285 per share and emphasizing the potential for international markets to lead the next wave of activity. This aligns with broader industry trends, as OPEC+ production adjustments and energy transition investments create new demand for advanced oilfield services.

Analyst Optimism and Price Targets

The investment community appears to share this optimism. As of November 2025, 15 analysts have assigned SLB a "Strong Buy" rating, with an average price target of $45.76-implying a 27.47% upside from its last traded price of $35.90 according to recent forecasts. Notable contributors to this bullish outlook include Rothschild & Co Redburn, which initiated a Buy rating with a $48.00 target, and TD Cowen, which reiterated a Buy with a $56.00 target according to market analysis. These recommendations suggest that analysts are factoring in SLB's digital transformation, acquisition synergies, and the long-term tailwinds of energy transition.

The Case for Long-Term Investors

The combination of a historically low P/E ratio, earnings momentum, and analyst optimism creates a compelling case for undervaluation. While SLB's GAAP earnings and revenue figures reflect the challenges of a maturing energy cycle, its adjusted metrics and cash flow generation demonstrate operational discipline. For investors with a multi-year horizon, the current valuation offers an entry point to participate in a company that is not only adapting to the energy transition but also leveraging AI and digital tools to enhance efficiency.

Critics may argue that the energy sector remains cyclical and vulnerable to macroeconomic shifts. However, SLB's strategic investments in digital services and its position as a key enabler of both traditional and renewable energy projects position it to thrive in a hybrid energy landscape. The recent acquisition of ChampionX, for instance, has expanded SLB's capabilities in chemical solutions and digital offerings, aligning with the sector's shift toward integrated, technology-driven solutions.

Conclusion

Schlumberger's current P/E ratio of 13.91, far below its 10-year average, signals a valuation that appears disconnected from its operational strengths and strategic momentum. The Q3 earnings beat, coupled with robust analyst ratings and a clear path to value creation, suggests that the market is underappreciating SLB's potential. For long-term investors, this divergence between price and fundamentals presents a compelling opportunity to position for the energy transition and the AI-driven efficiency gains that will define the next phase of the industry.