Shares of oil service company Schlumberger (SLB) are up 4% this afternoon, after it reported fourth-quarter earnings that did better than expected after the gloomy guidance it provided just one month ago.
At least one analyst liked what he saw, with James Crandell at Dahlman Rose reiterating his Buy rating and $92 target for the stock:
We believe that the SLB earnings release has modestly positive implications for the stock. In a challenging quarter for oil service companies, once again Schlumberger is clearly differentiating itself…We think the most important takeaway from the results is the outperformance of the Gulf of Mexico, which was able to offset weakness elsewhere in North America.
On a technical level Schlumberger’s stock is attractive, even after it outperformed its sector by registering an 8% gain in the past year (versus 4% for its industry) — it’s trading at 16.4 times forward earnings, well below its 10-year median level of 21.2. (All data from Thomson Reuters, as of yesterday’s close.) And yesterday it announced a hike in its quarterly dividend, to 31.25 cents a share, the largest increase in two years.
But could it be time to take a profit? Michael Purves, chief global strategist at Weeden & Co. this morning told investors to cash out of the stock “and wait for re-entry points.” His logic? This chart:
(Click on image for larger version.)
That of course is for the traders among you, rather than the more buy-and-hold inclined investor. But the chart above does illustrate how volatile Schlumberger’s stock, which trend to track with swings in oil prices, has been — it was at about $60 as recently as June. If nothing else, it could be a stock that’s useful for both long- and short-term investors.
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