In This Article:
Key Takeaways
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SLB had Q4 2024 earnings of 92 cents per share, which beat the Zacks Consensus Estimate of 90 cents.
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The oilfield service giant recorded quarterly revenues of $9.28 billion, which also beat estimates of $9.18 billion.
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Still, over the past year SLB stock has lost 12.3% against the industry's rally of 11%
Last week, SLB SLB reported strong fourth-quarter 2024 results, driven by earnings growth from the Digital & Integration and Production Systems business segments. Despite the positive, the oilfield service giant's overall business outlook is not impressive.
Find the latest earnings estimates and surprises on Zacks Earnings Calendar.
Before delving into the underlying reasons for the subdued outlook and addressing how investors should position themselves regarding the stock, let’s first review the fourth-quarter results.
SLB’s Q4 Earnings Snapshot
On Jan. 17, SLB reported fourth-quarter 2024 earnings of 92 cents per share (excluding charges and credits), which beat the Zacks Consensus Estimate of 90 cents. The bottom line increased from the year-ago quarter’s level of 86 cents.
The oilfield service giant recorded quarterly revenues of $9.28 billion, which beat the Zacks Consensus Estimate of $9.18 billion. The top line also improved from the year-ago quarter’s figure of $8.99 billion.
Along with the quarterly earnings, SLB announced approvals from the board of directors to hike quarterly dividends by 3.6%. The company has also decided on an accelerated share repurchase program involving the repurchase of $2.3 billion of its common stock. Notably, the ASR is part of SLB’s broader plan to return a minimum of $4 billion to shareholders in 2025 through dividends and stock repurchases.
Halliburton Company HAL and Baker Hughes BKR, two other leading players in the oilfield services sector, are yet to report fourth-quarter earnings.
Cautious Spending & U.S. Market Weakness Pose Hurdles for SLB
Baker Hughes reported an international rig count of 926 for the December quarter, a notable decline from 937 rigs in the previous quarter and 965 rigs in the fourth quarter of 2023. This reduction indicates a broader trend where exploration and production companies are probably implementing cuts in their capital expenditure budgets for drilling activities. This shift is primarily due to increased pressure from shareholders, who are advocating for capital returns over further investments in exploration and production.
Image Source: Baker Hughes Company
Lower drilling activities could diminish demand for services from major oilfield service provider SLB in the international market, which contributes significantly to the company’s revenues.