Amidst a shifting energy landscape, Schlumberger Limited is actively reshaping its operational footprint and technological offerings. While recent financial data indicates a slight deceleration in year-over-year cash flow growth, the company is pursuing significant strategic initiatives, including a major transaction involving its drilling rig business and the launch of advanced digital technologies, aiming to bolster its long-term market position and profitability.
These strategic maneuvers occur as the company continues to deliver solid performance across key financial metrics, underpinned by a focus on high-margin services and expanding its presence in key international markets. The interplay between these strategic shifts and underlying financial trends provides a crucial lens through which to assess SLB's trajectory in the current market cycle.
Analyzing Recent Financial Performance#
Schlumberger Limited demonstrated continued revenue and net income growth in the most recently reported fiscal year, ending December 31, 2024. Revenue reached $36.29 billion, representing a +9.52% increase from the $33.13 billion reported in 2023, according to Monexa AI financial data. This growth trajectory reflects ongoing activity levels in the global oil and gas industry, particularly in international and offshore markets where SLB maintains a strong presence.
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Net income also saw an increase, climbing to $4.46 billion in 2024 from $4.20 billion in 2023, a +6.14% rise. This translated to a Net Income Ratio of 12.29% for 2024, slightly down from 12.68% in 2023, yet remaining within a healthy range. Profitability margins have shown a positive trend over the past few years. The Gross Profit Ratio improved from 15.95% in 2021 to 20.56% in 2024. Similarly, the Operating Income Ratio significantly increased from 3.46% in 2021 to 17.43% in 2024, highlighting improved operational efficiency and cost management over this period.
However, a closer look at cash flow generation reveals a more nuanced picture in the most recent fiscal year compared to the prior period. Net cash provided by operating activities was $6.60 billion in 2024, a marginal * -0.53%* decrease from $6.64 billion in 2023. Free Cash Flow (FCF), defined as operating cash flow less capital expenditures, also slightly decreased to $4.47 billion in 2024 from $4.54 billion in 2023, a * -1.58%* change. While these year-over-year figures show a slight dip, the three-year historical compounded annual growth rates (CAGRs) for operating cash flow (+12.39%) and free cash flow (+8.82%) underscore a period of robust cash generation preceding 2024, indicating that the recent figures may reflect specific operational or investment cycles rather than a fundamental shift in cash generation capability.
The company's balance sheet remains solid. As of December 31, 2024, total assets stood at $48.94 billion, with total liabilities at $26.59 billion, resulting in total stockholders' equity of $21.13 billion. Total debt was $12.07 billion, with net debt at $8.53 billion. The Debt-to-Equity ratio was approximately 0.72x (or 71.75%) TTM, and the Net Debt-to-EBITDA ratio was 1.43x TTM, suggesting manageable leverage levels relative to earnings power. The Current Ratio was 1.24x TTM, indicating adequate short-term liquidity.
Return metrics also reflect strong performance. The Return on Invested Capital (ROIC) was 13.5% TTM, and the Return on Equity (ROE) was 20.14% TTM. These figures demonstrate the company's effectiveness in generating returns from both its overall capital base and shareholder equity.
Here is a summary of key financial performance metrics from the provided data:
| Metric | 2024 | 2023 | 2022 | 2021 |
|---|---|---|---|---|
| Revenue | $36.29B | $33.13B | $28.09B | $22.93B |
| Net Income | $4.46B | $4.20B | $3.44B | $1.88B |
| Gross Profit Ratio | 20.56% | 19.81% | 18.37% | 15.95% |
| Operating Income Ratio | 17.43% | 16.60% | 16.95% | 3.46% |
| Net Income Ratio | 12.29% | 12.68% | 12.25% | 8.20% |
| Operating Cash Flow | $6.60B | $6.64B | $3.72B | $4.65B |
| Free Cash Flow | $4.47B | $4.54B | $2.00B | $3.47B |
Strategic Initiatives and Portfolio Optimization#
SLB has recently undertaken significant strategic actions aimed at optimizing its business portfolio and leveraging technological advancements. A notable development is the transaction announced on May 29, 2025, where ADNOC Drilling acquired a 51% stake in SLB's drilling rig business in Oman and Kuwait for $864 million Reuters. This deal is part of SLB's broader strategy to potentially divest certain non-core assets or form partnerships that allow it to focus capital on higher-return opportunities and growth areas, such as digital technologies and integrated services. Such portfolio adjustments can enhance financial flexibility and sharpen strategic focus.
Complementing its portfolio adjustments, SLB continues to invest heavily in technological innovation. On May 6, 2025, the company announced the launch of Electris, its new digitally enabled electric well completion technology Business Wire. Electris is designed to provide digital control and real-time production intelligence across the wellbore. The stated goals of this technology are to maximize production and recovery, reduce total ownership costs for operators, and improve reservoir management. This launch underscores SLB's commitment to digital transformation within the oilfield services sector, positioning it as a leader in integrating software and automation into traditional operations.
These strategic moves, alongside securing major contracts for projects like BP's Ginger offshore Trinidad and Tobago and involvement in the Woodside Trion project in Mexico, demonstrate SLB's dual focus: optimizing its asset base through partnerships and divestitures while simultaneously investing in and deploying advanced technologies to capture growth in high-value service segments like deepwater and digital oilfield solutions.
Management Execution and Capital Allocation#
Management's approach to capital allocation reflects a balance between investing in future growth and returning value to shareholders. In fiscal year 2024, SLB incurred $1.93 billion in capital expenditures, a slight decrease from $2.09 billion in 2023, indicating a stable level of investment in maintaining and expanding its operational capabilities. The company also actively returned capital to shareholders through dividends and share repurchases.
Dividends paid amounted to $1.53 billion in 2024, an increase from $1.32 billion in 2023. The company's dividend history shows a recent pattern of quarterly dividends. The latest declared dividend was $0.285 per share, with an ex-date of June 4, 2025, and a payment date of July 10, 2025. The TTM dividend per share is $1.12, resulting in a dividend yield of 3.36% based on the current stock price. The TTM payout ratio stands at 37.28%, suggesting the dividend is well-covered by earnings. However, the 5-year dividend growth rate is reported as 0%, indicating a period of dividend stability rather than growth.
Share repurchases were also a significant component of capital return, totaling $1.74 billion in 2024, a substantial increase from $694 million in 2023. This suggests management views the company's stock as an attractive investment opportunity and is utilizing buybacks to enhance shareholder value, particularly given the current valuation metrics like the TTM PE ratio of 10.87x and forward PE of 10.07x for 2025 estimates.
These capital allocation decisions – continued investment in the core business and technology, coupled with increased share buybacks and stable-to-growing dividends – signal management's confidence in the company's operational strength and future prospects, while also responding to market conditions and shareholder expectations.
Competitive Landscape and Market Context#
Schlumberger Limited operates within the highly competitive oilfield services industry, facing key rivals such as Baker Hughes (BKR) and Halliburton (HAL). The market is characterized by cyclicality, heavily influenced by global oil and gas prices and the capital expenditure decisions of exploration and production companies. Despite these dynamics, SLB maintains a leading position, particularly in advanced technologies, integrated services, and international markets.
The industry is currently undergoing a transformation driven by digitalization and the increasing demand for efficiency and lower-carbon solutions. SLB's investments in digital platforms like Electris and its focus on integrated project management are critical differentiators in this environment. The ADNOC Drilling partnership also highlights a trend towards regional consolidation and strategic alliances, allowing companies to share risks and leverage local expertise and market access.
While volatile oil prices pose a perennial challenge, the underlying demand for energy services, especially in offshore and complex unconventional plays, provides a stable base for companies like SLB. The company's strategic emphasis on high-margin services and technological leadership positions it favorably within this competitive landscape, enabling it to capture value even during periods of market uncertainty.
Analyst Sentiment and Forward Estimates#
Analyst consensus provides insights into market expectations for SLB's future performance. Based on available estimates, the company is projected to continue its growth trajectory, albeit at a potentially slower pace than the recent historical CAGR. For fiscal year 2025, analysts estimate average revenue of $35.37 billion and average EPS of $3.13, according to Monexa AI data. These estimates suggest a slight decrease in revenue compared to the $36.29 billion reported in 2024, but an increase in EPS from the TTM figure of $3.07. This potential dynamic could imply margin expansion or effective cost management.
Looking further out, revenue is estimated to reach $36.60 billion in 2026 and $38.17 billion in 2027, with EPS estimated at $3.38 and $3.81, respectively. The estimated future EPS CAGR is +6.35%, indicating expected continued earnings growth over the medium term. The forward PE ratio for 2025 is estimated at 10.07x, which is slightly lower than the TTM PE of 10.87x, suggesting the stock is trading at a reasonable multiple relative to expected near-term earnings.
Recent earnings surprises have been mixed but generally positive. The company beat analyst EPS estimates in Q2, Q3, and Q4 of 2024 but missed slightly in Q1 2025 (actual $0.72 vs. estimated $0.734 on April 25, 2025). This recent miss, while minor, could warrant attention in the upcoming earnings announcement scheduled for July 17, 2025.
Here is a summary of analyst estimates for future periods:
| Metric | 2025 Estimate | 2026 Estimate | 2027 Estimate |
|---|---|---|---|
| Revenue (Avg) | $35.37B | $36.60B | $38.17B |
| EPS (Avg) | $3.13 | $3.38 | $3.81 |
| Forward PE | 10.07x | 9.22x | 8.44x |
Estimates based on available analyst data as of June 2025.
Key Takeaways#
Schlumberger Limited is navigating the cyclical energy market with a clear strategic focus on technological innovation and portfolio optimization. While fiscal year 2024 showed strong top-line and net income growth, the slight moderation in operating and free cash flow growth year-over-year warrants observation. However, longer-term cash flow generation remains robust.
The recent launch of digital solutions like Electris and strategic transactions such as the ADNOC Drilling partnership highlight management's proactive approach to positioning the company for future growth in key segments and potentially streamlining its asset base. The company maintains a healthy balance sheet with manageable debt levels and demonstrates a commitment to returning value to shareholders through dividends and increased share buybacks. Analyst estimates suggest continued earnings growth, and the current valuation appears reasonable relative to these expectations. The upcoming earnings announcement in July will be crucial for confirming these trends and providing further clarity on the impact of recent strategic initiatives.