Schlumberger, Limited (NYSE:SLB)

Schlumberger Limited (NYSE: SLB)

Thesis: Rising crude oil prices leads to expansion of drilling activities and subsequent rising rates charged by Schlumberger. Latest 10-Q filing shows 13.7% year-over-year quarterly rise in revenue, 29% increase in operating income, and a 52% rise in per share adjusted earnings. At the same time, outstanding shares decreased by 0.6%.
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Schlumberger is the world's leading provider of products and services to the oil and gas exploration industry.

Recovering crude oil prices have led to an expansion of exploration and production activity in the US, while Schlumberger's revenue from the rest of the world has remained basically flat to down 9% in the case of Latin America. If spot prices remain above $60 a barrel, countries other than the US are also likely to increase their capital expenditures in the oil and gas industry, further boosting Schlumberger's sales.

Schlumberger is financed by 48% debt and 52% shareholder equity.

Count of outstanding common shares is 1.385 billion. 1.6% of the shares are sold short.

78% of the analysts that cover the company are rating the stock a BUY, with an $80.89 average price target. While the business has shown substantial improvement over the last year, the stock price has fallen 6.4%. It currently trades at 30 times estimated 2018 earnings, and 20 times estimated 2019 earnings.

Price: $64.70 | Annualized Dividend: $2.00 | Dividend Yield: 3.11%

Yes, there are patent worries re. HAL, but that's a short-term operational headache and I think in the long-term this company's share price won't be driven by patents, but by capex. Personally, I expect Capex to climb, not shrink, so that makes me think this is a savvy time to pick up shares on sale.