Stock Analysis | Schlumberger Outlook - Bearish Technicals and Mixed Analyst Signals

Market Snapshot

Headline Takeaway: Schlumberger (SLB) faces a bearish technical outlook and mixed analyst signals, despite a recent price rise of 10.63%.

News Highlights

Recent news affecting the broader energy and equipment sectors include:

• Two large energy companies pledge to buy Michigan-made equipment: This could indicate a growing trend of domestic sourcing in the energy industry, potentially benefiting equipment manufacturers.
• Herc Holdings completes tender offer for H&E Equipment Services: The deal values each H&E share at $78.75 in cash plus 0.1287 Herc shares, signaling a shift in the equipment rental sector.
• China's Jinan highlights new momentum in new energy industry: With the BYD Jinan Base showcasing green, low-carbon technologies, this may reflect global trends influencing Schlumberger’s operations.

Analyst Views & Fundamentals

Two analysts from UBS and Melius Research have issued Strong Buy ratings for SLB in the last 20 days, with a simple average rating of 5.00 and a performance-weighted rating of 4.44. However, ratings are not consistent, with historical win rates differing—Melius Research has a perfect 100% historical win rate, while UBS has a 66.7% win rate.

Despite the recent price rise of 10.63%, the analyst ratings and market expectations align with the upward trend. However, the fundamental outlook is mixed, with a model score of 3.76, suggesting moderate weakness. Key fundamental values include:

• Operating revenue YoY growth rate: -4.54% (negative trend)
• Net income-to-revenue ratio: 33.06%
• PE ratio: 44.87
• Profit-to-market value (Profit-MV): 2.88%
• Cash-to-market value (Cash-MV): 36.15%
• Interest coverage ratio: 9.12% (EBIT/interest expense)
• Operating cycle: 147.07 days

Money-Flow Trends

Schlumberger has seen negative money flow across all investor sizes:

• Overall inflow ratio: 48.53%
• Small, medium, large, and extra-large investor inflow ratios: all below 50%, indicating weak participation
• Block investor trend: negative with an inflow ratio of 48.63%

While the fund-flow score is rated 7.89 (‘good’), the overall trend is bearish. This suggests that while big money is showing limited optimism, retail and smaller investors are also not enthusiastic.

Key Technical Signals

Our internal diagnostic score (0-10) for technical analysis is 3.14, indicating a weak technical outlook. Bearish signals dominate (3 vs. 0 bullish), with mixed insights from recent indicators:

• RSI Overbought: internal diagnostic score of 1.91 — suggests overbought conditions but with a neutral bias
• WR Overbought: internal diagnostic score of 1.16 — strongly bearish signal
• Bullish Engulfing: internal diagnostic score of 2.91 — neutral bias with weak bullish potential
• Marubozu White: internal diagnostic score of 6.57 — neutral to bullish, but with limited historical success (66.67% win rate)

Over the past five days, WR Overbought and RSI Overbought have appeared repeatedly, while Marubozu White emerged on August 29. This suggests a volatile and directionless short-term trend.

Conclusion

With a weak technical score of 3.14, mixed analyst ratings, and negative money flows, Schlumberger appears to be in a consolidation phase. While the price has risen 10.63% recently, the fundamentals and technicals suggest caution. Investors should consider waiting for a pull-back before entering, and keep an eye on the broader energy equipment sector for any new catalysts.