Report
Valens Research

SLB - Embedded Expectations Analysis - 2017 11 03

- Schlumberger Limited (SLB:USA) currently trades near historical lows relative to UAFRS-based (Uniform) Assets, with a 2.3x Uniform P/B. However, even at these levels, the market has bullish expectations for the firm, which may be unwarranted given management's concerns about their operations and macro environment

- Specifically, management has concerns about potential headwinds related to their production reactivations, and continued declines in Cameron's long cycle businesses. They also appear concerned about activity in their international markets, particularly Latin America and Russia. Should the firm fail to drive Uniform ROA back towards historical averages, as management sentiment suggests, equity downside would be warranted

Underlying
Schlumberger

Schlumberger provides technology for reservoir characterization, drilling, production and processing to the oil and gas industry. The company has four segments: Reservoir Characterization, which consists of the principal technologies involved in finding and defining hydrocarbon resources; Drilling, which consists of the principal technologies involved in the drilling and positioning of oil and gas wells; Production, which consists of the principal technologies involved in the lifetime production of oil and gas reservoirs; and Cameron, which consists of the principal technologies involved in pressure and flow control for drilling and intervention rigs, oil and gas wells and production facilities.

Provider
Valens Research
Valens Research

In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:

  • GAAP and IFRS have failed to provide rules for reliable financial statement reporting
  • Stock analyst recommendations are not grounded in disciplined financial analysis
  • Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
  • Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available

We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.

  • Corporate credit ratings remain years behind the fundamental underpinnings of company performance
  • Stock analysts continue to make recommendations with deeply inherent biases
  • Research firms have failed to break down the walls between credit, equity, and macroeconomic research
  • The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming

The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.

Analysts
Valens Research

Other Reports on these Companies
Other Reports from Valens Research
Other Reports from these Analysts

ResearchPool Subscriptions

Get the most out of your insights

Get in touch