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Started By
Message
Schlumberger
Posted on 3/6/12 at 10:35 am
Posted on 3/6/12 at 10:35 am
Sitting at 73, how low do you think it will go? Told myself i would buy if it got below 73
2
Posted on 3/6/12 at 10:50 am to JL
In the $70.00 range. It has been high lately but was in the $65 rane fairly recently. If you buy at $73, you might need to hold it a bit to get your $ back. I work in oil & gas service in accounting, and I think all in the industry are doing well. Does the market recognize that? I don't know. I've lost money trying to trade oil & gas stocks based off what I'm seeing at work and made money on non oil & gas stocks.
I feel like the market at large will have a sell-off soon and might give you some lower prices. If you buy in at $73, I'd say do it for long term return, not a short, quick flip (bbut if the market allows you to profitably flip, do it).
2 year chart
I feel like the market at large will have a sell-off soon and might give you some lower prices. If you buy in at $73, I'd say do it for long term return, not a short, quick flip (bbut if the market allows you to profitably flip, do it).
2 year chart
Posted on 3/6/12 at 2:57 pm to meldawg399
I'll get on researching SLB a little more thoroughly later but right now my valuations of SLB are coming out to around $90 plus. From a technical perspective ( and I'm not a technician) its below it's 50 & 200 sma so it could fall some more. Looks to have some support around high 60's so I'd look to start buying on any further weakness.
Posted on 3/7/12 at 12:02 pm to greenhead11
Ok after doing a little research SLB does appear to have significant potential. Despite competition, the demand for oil is not going to slack. China is demanding more and more everyday. 80% of SLB's revenues come from abroad.
After 2 different DCF analysis I got price targets of $115 & 91. Based on their P/E I got $103. Averaging these targets out I get a $103 price target- which I think is a bit optimistic. Nonetheless I think SLB is a strong buy below $72-$74.
Not to mention they have a strong correlation with Oil prices. Ran a regression analysis and got r-squared of .76 (for those of you familiar)
After 2 different DCF analysis I got price targets of $115 & 91. Based on their P/E I got $103. Averaging these targets out I get a $103 price target- which I think is a bit optimistic. Nonetheless I think SLB is a strong buy below $72-$74.
Not to mention they have a strong correlation with Oil prices. Ran a regression analysis and got r-squared of .76 (for those of you familiar)
Posted on 3/7/12 at 12:07 pm to greenhead11
quote:
greenhead11
I work in the oil service industry.....demand has been strong and financial reporting lags behind when the earnings are actually earned. It seems to me everyone in the oil & gas industry is doing well. Just some operational info to go along with the financial info.
Posted on 3/7/12 at 12:59 pm to greenhead11
What did you run the regression on? What was the correlation? Just curious, I don't think its material to the conversation.
This post was edited on 3/7/12 at 1:03 pm
Posted on 3/7/12 at 1:07 pm to meldawg399
quote:
I work in the oil service industry.....demand has been strong and financial reporting lags behind when the earnings are actually earned. It seems to me everyone in the oil & gas industry is doing well. Just some operational info to go along with the financial info.
Obvious post is obvious? O&G stocks are about valuation right now and IMO on indirectly about earnings. The sector is on fire, every one should be doing well on a fundamental basis (sans gassy companies). This is the same argument Scoop does not understand about AAPL. That being said I don't know what SLB's valuation is right now so it may very well be a good opportunity to buy.
Posted on 3/7/12 at 1:08 pm to kfizzle85
Regression,
Sorry didn't provide context. I ran it on SLB stock price change vs. NYMEX crude price change over the last 5yrs. R^2 =.76--> moderate correlation.
Take away, as oil prices continue to go up (I think almost everyone agrees on this), SLB should follow. Buts thats really annecdotal to why I think they will prosper..
Disclaimer: I do not own SLB right now. I'm waiting for a better entry price.
Sorry didn't provide context. I ran it on SLB stock price change vs. NYMEX crude price change over the last 5yrs. R^2 =.76--> moderate correlation.
Take away, as oil prices continue to go up (I think almost everyone agrees on this), SLB should follow. Buts thats really annecdotal to why I think they will prosper..
Disclaimer: I do not own SLB right now. I'm waiting for a better entry price.
Posted on 3/7/12 at 1:17 pm to greenhead11
In valuation terms: LTM PE 20x
Forward P/E 13x 2012 eps
Historic PE 19x
On that basis a discount.
I haven't checked the industry average, but I'd say SLB is slightly undervalued going forward
Forward P/E 13x 2012 eps
Historic PE 19x
On that basis a discount.
I haven't checked the industry average, but I'd say SLB is slightly undervalued going forward
Posted on 3/7/12 at 1:30 pm to greenhead11
You can get a DCF to return whatever value you want so I would be more interested to hear your assumptions behind EBITDA, caped and exit multiple that derived those values.
Posted on 3/7/12 at 2:34 pm to Athanatos
Very very true: I'll do my best.
Perp. Growth
Discount rate: 10%
Terminal growth 7%
Growth next 5yrs 20%
(analyst consensus next 2yr CAGR 30% so I intentionally under cut)
COGS 79.3% of sales
SGA increasing at 1% starting at 5% of sales
CAPEX 10.6% sales
EBITDA multiple
10.6x TEV/EBITDA (historical avg)
I don't buy into academic valuation methods as much as PE analysis. When they come out similar I have a little more confidence.
Perp. Growth
Discount rate: 10%
Terminal growth 7%
Growth next 5yrs 20%
(analyst consensus next 2yr CAGR 30% so I intentionally under cut)
COGS 79.3% of sales
SGA increasing at 1% starting at 5% of sales
CAPEX 10.6% sales
EBITDA multiple
10.6x TEV/EBITDA (historical avg)
I don't buy into academic valuation methods as much as PE analysis. When they come out similar I have a little more confidence.
Posted on 3/7/12 at 5:11 pm to greenhead11
Where you getting 30% 2yr cagr from, the numbers I get on CapIQ for revs, eps, and ebitda are all below that (19-24%)? Also can you expand on what you mean by not buying into academic valuation methods as much as PE analysis?
Posted on 3/7/12 at 5:28 pm to greenhead11
We may have a new top tier money talker on our hands.
Posted on 3/7/12 at 7:47 pm to kfizzle85
Sure. DCF analysis have many inherent assumptions/flaws.
a. The company will grow at uniform terminal rate
- Companies in their youth and in volitile industires have dramatically different growth rates yoy. Saying that a company will grow at X percent until infiniti is simply not realistic. A DCF model works better for a company like PG (or you name it KO, MMMM) that will grow at a more uniform rate
b. Discount rate
- What is your rate of return? Likely it is different from mine which is different than his. What is the cost of debt? This is something that could change as well over the course of time
c.Terminal TEV/EBITDA Multiple- There is no way to anticipate any number of exongenous circumstances that may affect a company's EV or earnings. Forcasting a year out allows one to more accurately anticipate what the future will be like. Who would have ever known the (Insert disaster/political change/economy change) would happen 3 years from now that killed the stock
***But who ever knows what can happen so this could be less relevant***
Dividend Growth Model- Don't even get me started on how useless this is for atleast 50% of companies.
While P/E analysis methods have their flaws, I feel like they give you a better apples to apples comparison of valuation. Yes EVERYTHING depends on EPS, future EPS, etc but this method a hell of a lot more pragmatic.
I get my data from Cap IQ too. I used 20% as the CAGR. I screwed up the analyst consensus 30% rate, I had that joted down- its the past 2 years CAGR. Regardless, I used what I thought were reasonable numbers given how much I know about the company. Just trying to offer some informed guidance. I'm a firm believer that one can manage ones own money and want to help others investing. I'm thinking about this company myself. I like it as a play on oil prices and emerging markets. But I'm not chasing this one up!
a. The company will grow at uniform terminal rate
- Companies in their youth and in volitile industires have dramatically different growth rates yoy. Saying that a company will grow at X percent until infiniti is simply not realistic. A DCF model works better for a company like PG (or you name it KO, MMMM) that will grow at a more uniform rate
b. Discount rate
- What is your rate of return? Likely it is different from mine which is different than his. What is the cost of debt? This is something that could change as well over the course of time
c.Terminal TEV/EBITDA Multiple- There is no way to anticipate any number of exongenous circumstances that may affect a company's EV or earnings. Forcasting a year out allows one to more accurately anticipate what the future will be like. Who would have ever known the (Insert disaster/political change/economy change) would happen 3 years from now that killed the stock
***But who ever knows what can happen so this could be less relevant***
Dividend Growth Model- Don't even get me started on how useless this is for atleast 50% of companies.
While P/E analysis methods have their flaws, I feel like they give you a better apples to apples comparison of valuation. Yes EVERYTHING depends on EPS, future EPS, etc but this method a hell of a lot more pragmatic.
I get my data from Cap IQ too. I used 20% as the CAGR. I screwed up the analyst consensus 30% rate, I had that joted down- its the past 2 years CAGR. Regardless, I used what I thought were reasonable numbers given how much I know about the company. Just trying to offer some informed guidance. I'm a firm believer that one can manage ones own money and want to help others investing. I'm thinking about this company myself. I like it as a play on oil prices and emerging markets. But I'm not chasing this one up!
Posted on 3/7/12 at 8:00 pm to greenhead11
I been wanting to find out more about Cap IQ. How you like the site?
Posted on 3/7/12 at 8:58 pm to Interception
Its a definite love/hate relationship. Today was definitely a hate day. Ever since getting Excel 2010 I have had problems getting things to work with Cap IQ plug ins.
Pros
- I think they claim they have information to liek 99% of companies in the world. If its traded, its on Cap IQ.
- Very user friendly intuitive interface- especially for research
- the ability to put anything directly into excel
- charting- you can plot anything vs. anything. GDP, CPI, and stock price for ex.
Cons
- Charting as well- if you trade, like technical analysis, and need real time quotes, do NOT like Cap IQ, but its not designed for traders. Can also depend on what level of services you subscribe to?
-Cost. I have no idea what it is, but its probably alot.
-Its definitely not "pretty", I keep my E Trade, Ameritrade windows open cause I get tired looking at Cap IQ
Overall, if its reasonably priced for you, its definitely worth. You can get most everything on there thru other sites but you'd have to do some DD
Pros
- I think they claim they have information to liek 99% of companies in the world. If its traded, its on Cap IQ.
- Very user friendly intuitive interface- especially for research
- the ability to put anything directly into excel
- charting- you can plot anything vs. anything. GDP, CPI, and stock price for ex.
Cons
- Charting as well- if you trade, like technical analysis, and need real time quotes, do NOT like Cap IQ, but its not designed for traders. Can also depend on what level of services you subscribe to?
-Cost. I have no idea what it is, but its probably alot.
-Its definitely not "pretty", I keep my E Trade, Ameritrade windows open cause I get tired looking at Cap IQ
Overall, if its reasonably priced for you, its definitely worth. You can get most everything on there thru other sites but you'd have to do some DD
Posted on 3/7/12 at 9:30 pm to TheHiddenFlask
Pulls up a chair to listen.
Schlumberger is a big employer in my neighborhood.
Schlumberger is a big employer in my neighborhood.
Posted on 3/8/12 at 2:56 pm to JL
quote:Good buy at those levels. Own good amt of SLB around a 73 pricepoint. Pleased with that. Multiyear projections are ~180. Decent company. FWIW, Haliburton projections are ~100. Another solid company IMO. Our overall holdings there avg just under 34. Anticipate nice LTCG's in both.
Sitting at 73, how low do you think it will go? Told myself i would buy if it got below 73
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