Despite concerns about a slump in U.S. oil drilling, SLB joins peer Halliburton in priming a new move. Only top-rated group leader Tidewater made last month's list of new buys by the best mutual funds, but SLB stock has drilled its way onto the IBD Breakout Stocks Index.
Formerly known as Schlumberger, SLB hails from the Field Services industry group within the Oil & Gas sector. Along with Tidewater and NexTier Oilfield Solutions, SLB stock is among 10 industry players with a Composite Rating of 95 or higher. SLB's 97 rating in IBD Stock Checkup shows the company is outpacing 97% of all stocks in terms of key stock-picking factors.
The industry ranks a solid No. 39 out of the 197 groups IBD tracks.
See Who Joins SLB Stock On The IBD Breakout Stocks Index
A+ Funds Pipe Money Into Oil & Gas Leader SLB
In a clear indication of institutional demand, 125 funds with an A+ rating from IBD own shares in SLB stock.
While earnings estimates for the current year come in shy of peers like Tidewater, Oceaneering International and Expro Group, Wall Street forecasts a solid 37% EPS increase.
Note how SLB and four of its industry peers sport an A SMR Rating. This proprietary metric tracks sales growth, profit margins and return on equity — key ingredients to sustainable earnings growth.
As IBD sister news outlet Barron's reported, the Q2 report from SLB underlined a trend also seen at fellow oil services firms like Baker Hughes and Halliburton: a slump in U.S. oil-drilling activity alongside increasing overseas activity.
With its expansive global footprint across more than 100 countries, SLB is well positioned to tap opportunities outside of the U.S. Rising revenue reflects that. After posting three quarters of sales well over $7 billion, SLB produced revenue of $8.1 billion, a 20% year-over-year gain.
| Company | Symbol | Comp Rating | EPS Est Cur Yr % | EPS Rating | RS Rating | SMR Rating | A/D Rating |
|---|---|---|---|---|---|---|---|
| Tidewater | TDW | 99 | 1,429 | 81 | 98 | C | A- |
| ProPetro | PUMP | 98 | 68 | 81 | 86 | C | B+ |
| SLB | SLB | 97 | 37 | 89 | 86 | A | B- |
| NexTier Oilfield Solutions | NEX | 97 | 53 | 80 | 92 | A | B |
| Oceaneering International | OII | 96 | 213 | 81 | 95 | C | B- |
| Liberty Energy | LBRT | 96 | 43 | 79 | 82 | A | B+ |
| North Amer Construction | NOA | 95 | 12 | 99 | 97 | A | B+ |
| Atlas Energy Solutions | AESI | 95 | -10 | 82 | 88 | A | A |
| Halliburton | HAL | 95 | 41 | 86 | 84 | A | C+ |
| Expro Group | XPRO | 95 | 481 | 56 | 91 | C | B+ |
SLB Stock Gets Set To Pump Out A Breakout
Several technical factors are lining up to potentially fuel a breakout for SLB stock.
On July 7, SLB soared past its 200-day moving average in volume 135% above average. The day's gain of 8.6% — and the continued rise in subsequent sessions — could be the result of expectations of oil and gas prices remaining elevated.
As the stock continued its rise, the 21-day exponential moving average climbed above the 200-day line. Now the 50-day line is on the rise and on the verge of retaking the longer-term 200-day benchmark. Such positive shifts in trend for the moving averages bode well for SLB stock.
SLB now trades just 3% below a 59.45 buy point in a cup pattern. Another positive is that the current setup is a first-stage base, which has a higher likelihood of success than later-stage consolidations.
Follow Matthew Galgani on Twitter at @IBD_MGalgani.
