SLB Stock Climbs as Q4 Earnings Outshine Forecasts with Robust International Expansion

In recent market activity, shares of SLB, formerly known as Schlumberger, have seen an uptick, recording a 2.3% increase during Friday's trading session. This surge is attributable to the company's fourth-quarter earnings surpassing analysts' projections, notably bolstered by robust international growth, while its North America segment displayed more stable results.

Q4 Financial Highlights

SLB announced a rise in net income for the fourth quarter, reaching $1.11 billion or $0.77 per share. This performance marks an improvement from the previous year's $1.07 billion or $0.74 per share. The company's revenue saw a notable 14% year-over-year increase, ascending to nearly $9 billion, with a striking 18% year-over-year international revenue hike to $7.29 billion reflecting SLB's strong global market presence.

Contributing to this quarter's success was the strategic acquisition of Aker's subsea equipment business, influencing 70% of the sequential revenue growth observed.

Commitment to Shareholders

Further positive news comes with SLB's impressive free cash flow for Q4, reaching $2.28 billion and significantly exceeding the anticipated $1.2 billion. In line with its financial health, the company divulged plans to allocate over $2.5 billion to its shareholders within the current year. This return will manifest in a 10% increase in dividends and an extension of stock repurchases.

Future Outlook

Looking ahead to FY 2024, SLB projects a mid-teens percentage increase in international revenues, whereas North America is expected to observe growth in the mid single digits. CEO Olivier Le Peuch expressed an optimistic forecast for continued growth into 2024, mentioning the anticipated support from over $100 billion in global offshore final investment decisions within the next two years, projecting a bright future for the subsea market.

Le Peuch anticipates more than $4 billion in additional subsea bookings for 2024, representing a significant 25% jump from the previous year. For the upcoming quarters, the company expects year-over-year revenue growth in the low teens and EBITDA growth in the mid-teens, followed by a traditional uptick in activity in the second quarter, ultimately leading to an acceleration of growth in the latter half of the year.

Despite geopolitical tensions, such as the conflict in Gaza and Red Sea disturbances, SLB's Middle East operations remain unaffected. The CEO maintains a positive outlook, projecting an absence of significant impacts on activities in 2024, barring further escalations. Beyond 2025, SLB envisions record-level investments in the Middle East, especially by Saudi Arabia and the United Arab Emirates, and foresees sustained vigorous offshore activities in regions such as Brazil, Angola, Guyana, and Norway.

Stocks, Earnings, Growth