SLB’s (SLB) earnings increased in the third quarter on Friday amid cautious market conditions. The oilfield services company reported adjusted earnings of $0.89 per share, up by 14% year-over-year but just below consensus estimates of $0.90 per share.
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SLB’s Q3 Revenues Got a Boost from International Markets
Furthermore, the company’s revenues increased by 10% year-over-year to $9.2 billion but missed Street expectations of $9.3 billion. SLB’s growth was driven by steady demand for its equipment and technology in international markets and from offshore projects in North America. However, the company cautioned that international producers may limit spending due to lower oil prices.
Increasingly, SLB is relying heavily on overseas demand to offset weaker performance in North America, with 81% of its revenues coming from international markets.
SLB’s CEO Comments on the Q3 Results
SLB’s CEO, Olivier Le Peuch, commented, “This performance was achieved despite an environment where short-cycle activity growth softened and some international producers adopted cautious spending due to lower oil prices and ample global supply.”
Additionally, Le Peuch warned that the growth in upstream spending has slowed in recent months as customers have become more conservative with capital expenditures and discretionary spending in response to declining commodity prices.
SLB Announces Dividend and Stock Buyback
In addition, SLB announced a quarterly dividend of $0.275 per share and bought back 11.3 million shares of its common stock for a total purchase price of $501 million during the third quarter.
SLB Reaffirms Its FY24 Outlook
Looking ahead, SLB reaffirmed its FY24 outlook and expects adjusted EBITDA margins to grow at or above 25%. Additionally, the company announced that it will sell its interests in the Palliser Block located in Alberta, Canada. The Palliser Block consists of oil and gas wells and surface facilities.
Is SLB Stock a Good Buy?
Analysts remain bullish about SLB stock, with a Strong Buy consensus rating based on 14 Buys and one Hold. Over the past year, SLB has dropped by more than 20%, and the average SLB price target of $65.39 implies an upside potential of 50.5% from current levels. These analyst ratings are likely to change following SLB’s results today.
