Stock Analysis | Schlumberger Outlook - A Weak Technical Signal Amid Optimistic Analysts

Schlumberger Outlook - A Weak Technical Signal Amid Optimistic Analysts

Market Snapshot: The technical outlook for Schlumberger (SLB) is weak, with bearish signals dominating and an internal diagnostic score of 3.67, suggesting a cautious stance for investors.

News Highlights

Recent news has mostly revolved around developments in the energy and construction equipment sectors, with limited direct relevance to Schlumberger:

• May 30, 2025 - Herc Holdings Completes Tender Offer for H&E Equipment Services: This acquisition, valued at $78.75 per share plus stock, could signal a broader industry trend of consolidation in the equipment services sector. However, it does not directly affect Schlumberger's operations.
• May 29, 2025 - Two Large Energy Companies Pledge to Buy Michigan-Made Equipment: This partnership aims to support U.S. manufacturers and create jobs, potentially benefiting the broader energy equipment supply chain. While positive for the sector, it may not directly boost Schlumberger's stock in the short term.
• May 28, 2025 - Jinan's New Energy Industry Gains Momentum: A foreign media delegation visited Jinan to highlight developments in the green energy and vehicle-grid integration sector. While this points to growing global interest in energy solutions, it's unclear how this will impact Schlumberger's market position.

Analyst Views & Fundamentals

Despite the weak technical signal, analysts remain optimistic about Schlumberger. The average rating score (simple mean) is 5.00, while the weighted rating score is 4.44, indicating a strong but somewhat dispersed consensus. Two major institutions—UBS and Melius Research—have both issued "Strong Buy" ratings within the last 20 days, showing alignment with the recent 4.92% price rise.

On the fundamental side, key metrics show a mixed picture:

• Net Income-to-Revenue Ratio: 33.06%, with an internal diagnostic score of 3
• Net Profit Margin (NPM): 12.26%, with an internal diagnostic score of 2
• Return on Assets (ROA): 2.15%, with an internal diagnostic score of 3
• Price-to-Earnings (PE) Ratio: 44.87, with an internal diagnostic score of 0
• Net Cash Flow from Operating Activities / Operating Revenue Ratio: 10.58%, with an internal diagnostic score of 2

While some metrics like net income-to-revenue and net profit margin appear healthy, the high PE ratio and weak ROA suggest potential valuation concerns and room for improvement in asset efficiency.

Money-Flow Trends

Big-money investors are showing a negative trend in fund flows, with inflow ratios across all categories—small, medium, large, and extra-large—hovering around 47-49%. This indicates that large and institutional investors are cautiously withdrawing from the stock. The fund-flow score is 7.84, which is classified as "good," but the negative trend suggests caution.

Compared to retail flows, which are also trending negative, it appears the broader market is not convinced by the current valuation or near-term outlook. The block inflow ratio is 48.13%, reinforcing the idea that large investors are closely monitoring the situation.

Key Technical Signals

From a technical perspective, the internal diagnostic score of 3.67 reflects a weak market signal. Bearish indicators such as RSI Overbought and WR Overbought are prominent, while bullish indicators are absent:

• RSI Overbought: Score of 2.4 — overbought conditions, suggesting a possible correction.
• WR Overbought: Score of 1.67 — further reinforcing the overbought signal.
• Bullish Engulfing: Score of 4.05 — a moderate positive signal, but not strong enough to offset the bearish indicators.
• Marubozu White: Score of 6.57 — a bullish candlestick pattern, but its average return is negative, so caution is warranted.

Over the last five trading days, key indicators by date include: - August 26: WR Overbought - August 25: WR Overbought, RSI Overbought - August 28: WR Overbought, RSI Overbought - August 27: WR Overbought, Bullish Engulfing - August 29: WR Overbought, RSI Overbought, Marubozu White

This pattern highlights the dominance of bearish and overbought indicators, with only occasional bullish candlestick activity. The technical key insight is that the market is in a volatile state with unclear direction and bearish signals currently dominant.

Conclusion

While Schlumberger is receiving strong analyst backing and is supported by a relatively positive fundamental outlook, the current technical signal remains weak. With an internal diagnostic score of 3.67 and key indicators leaning bearish, investors are advised to exercise caution. It may be wise to consider waiting for a pull-back or to monitor upcoming earnings and industry developments for signs of a stronger near-term reversal.