Schlumberger (SLB:NYS) Fundamental Valuation Report

Fundamental Valuation Report


Energy:Oil & Gas Equipment & Services

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Close Price/Date
$43.31 (USD) 23/01/2019

Weighted Valuation
$54.17 (USD)

Overall Rating
Undervalued by 25.1%

Valuation Models Analyst Consensus: $54.17 (USD)
(in order of importance)
Valuation Methods This company is:
Cash Flow: Undervalued on a Cash Flow Valuation
Comparable Company: Overvalued on a Comparable Valuation
Asset: Undervalued on an Asset Valuation

Company Overview (SLB:NYS USD)

Price 43.31
Range 42.71 – 44.19
52 week 35.19 – 77.61
Open 44.06
Vol / Avg. 13.57M/16.31M
Mkt cap 59.9B
P/E 28.73
Div/yield 2.00/0.04
EPS 1.53
Shares 1.38B
Beta 1.18

Company Description

Schlumberger is the world’s largest supplier of products and services to the oil and gas industry. The company operates its business via multiple groups: Reservoir Characterization, Drilling, Production, and Cameron. The firm is investing more than any other services firm to make its offerings more bundled, which it believes is likely to be one of the key industry trends during the next 10 years. Its efforts on this front are most visible via its Schlumberger Production Management (SPM) business, which now accounts for 10% of its revenue.

Valuation Details

 We have up to 6 valuation points for each company. Details are at the bottom of the report.

Discounted Cash Flow and Sensitivity Analysis for SLB:NYS

Using a discounted cash flow model we generated an intrinsic value of $67.44 (USD) for SLB:NYS

Sensitivity Analysis

(showing how changes in the input variables impact the DCF calculation)

SLB:NYS Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $67.44 1% 5% 1% 5%
WACC (or Ke) 9.17 $83.75 $55.68
Terminal Growth Rate 3.00 $56.92 $82.02
Tax Rate 0.17 $72.71 $62.16
Cash Flow 10,007,299,371 $63.06 $71.81
Capital Expenditures 0 $67.44 $67.44
Long Term Debt 21,277,000,000 $68.21 $66.67

* Changes are absolute: ex WACC from 8% to 7%

Comparables Model

Using similar companies and price based ratios we generated a valuation of $24.91 (USD) for SLB:NYS. We also generated a valuation of $34.71 (USD) using other metrics and comparables.
The comparable companies were and Halliburton (HAL:NYS).

Company SLB:NYS End Date Value
Earnings/Share $1.53 (USD)
Book Value/Share $26.42 (USD)
Sales/Share $23.67 (USD)
Cash Flow/Share $4.06 (USD)
EBITDA/Share $4.85 (USD)
Price Based on Comps Adjustment Factor (%)
$0.00 (USD) 12.9
$68.36 (USD) -77.4
$22.94 (USD) 39.0
$16.98 (USD) 3.0
$34.48 (USD) 0.0
SLB:NYS Ratios Used Average Values HAL:NYS
0.00 PE Ratio 132.90 132.90
1.37 PB Ratio 2.59 2.59
1.52 PS Ratio 0.97 0.97
8.88 PCF Ratio 7.02 7.02
16.57 EV to EBITDA 7.11 7.11


Using a multiples approach we generated a valuation of  $65.28 (USD) for SLB:NYS

Company SLB:NYS End Date Value
Earnings/Share $1.53 (USD)
Book Value/Share $26.42 (USD)
Sales/Share $23.67 (USD)
Cash Flow/Share $4.06 (USD)
EBITDA/Share $4.85 (USD)
Price Based on Comps Adjustment Factor
$46.27 (USD) 0
$68.29 (USD) 0
$68.33 (USD) 0
$55.94 (USD) 0
$87.58 (USD) 0
Ratios Ratio Average
PE Ratio 30.24
PB Ratio 2.59
PS Ratio 2.89
PCF Ratio 13.77
EV to EBITDA 18.06

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  SLB:NYS for the last 10 years was  2.58

We ran the Adjusted Book Value for  SLB:NYS and generated a book value of  $26.15 (USD)
By multiplying these we get an adjusted valuation of  $67.57 (USD)

Analyst Data

In the Stockcalc database there are 6 analysts that provide a valuation for SLB:NYS. The 6 analysts have a concensus valuation for SLB:NYS for 2019 of $54.17 (USD).

SLB:NYS Schlumberger

Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
7 1 0 4.7500 Buy 2019-1-22

Current Price: 43.31 USD

Analyst Consensus
USD Millions 2019 2020
Mean EPS 1.83 2.51
# EPS Analysts 8 5
Mean Revenue 34,371.30 37,910.50
# Revenue Analysts 6 5
Mean Target Price 54.17
Mean Cash Flow 4.27 5.01
Mean EBITDA 7,279.60 8,404.30
Mean Net Income 2,476.50 3,475.90
Mean Debt Outstanding 14,358.00 13,668.10
Mean Tax Rate 18.20 18.00
Mean Growth Rate 25.94
Mean Capital Expenditure 2,316.80 2,329.60

Explanation of Valuation Models

We have up to 6 valuation points for each company in the database.

The Discounted Cash Flow (DCF) valuation is a cash flow model where cash flow projections are discounted back to the present to calculate value per share. DCF is a common valuation technique especially for companies undergoing irregular cash flows such as resource companies (mining, forestry, oil and gas) going though price cycles or smaller companies about to generate cash flow (junior exploration companies, junior pharma, technology firms…).

The Price Comparables valuation is the result of valuing the company we are looking at on the basis of ratios from selected comparable companies: Price to Earnings, Price to Book, Price to Sales, Price to Cash Flow, Enterprise Value (EV) to EBITDA. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

We have included the Other Comparables as a way to value companies that cannot be valued using Earnings based ratios. This technique is very useful for companies still experiencing negative cash flows such as mining exploration firms. We use Cash/Share, Book Value/Share, MarketCap, 1 Year Return, NetPPE as the ratios here. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

Multiples are similar to Price comparables where we look at current or historic ratios for the company in question to assess what it should be worth today based on those historic ratios. We use the same 5 ratios as in the price comparables and value the company with its historic averages.

With Adjusted Book Value (ABV) we calculate the book value per share for the company based on its balance sheet and multiply that book value per share by its historical price to book ratio to calculate a value per share.

If we have Analyst coverage for the company we use the consensus target price here.

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