Intrinsic value of Schlumberger - SLB

Previous Close

$65.37

  Intrinsic Value

premium content

  Rating & Target

premium content

  Value-price divergence*

premium content

Previous close

$65.37

 
Intrinsic value premium content
 
Up/down potential premium content
 
Rating premium content
 
Value-price divergence* premium content

Premium access subscription - $499/yr

please register and log in before paying

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of SLB stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 90.3

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -21.41
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  27,920
  28,478
  29,133
  29,882
  30,723
  31,654
  32,676
  33,789
  34,994
  36,291
  37,684
  39,174
  40,764
  42,457
  44,256
  46,165
  48,188
  50,330
  52,594
  54,987
  57,514
  60,180
  62,991
  65,954
  69,077
  72,365
  75,828
  79,472
  83,307
  87,342
  91,585
Variable operating expenses, $m
 
  11,370
  11,574
  11,807
  12,069
  12,359
  12,677
  13,024
  13,399
  13,804
  14,237
  12,203
  12,698
  13,225
  13,785
  14,380
  15,010
  15,677
  16,383
  17,128
  17,915
  18,746
  19,621
  20,544
  21,517
  22,541
  23,620
  24,755
  25,950
  27,206
  28,528
Fixed operating expenses, $m
 
  19,340
  19,823
  20,319
  20,827
  21,347
  21,881
  22,428
  22,989
  23,564
  24,153
  24,756
  25,375
  26,010
  26,660
  27,326
  28,010
  28,710
  29,428
  30,163
  30,917
  31,690
  32,483
  33,295
  34,127
  34,980
  35,855
  36,751
  37,670
  38,612
  39,577
Total operating expenses, $m
  29,591
  30,710
  31,397
  32,126
  32,896
  33,706
  34,558
  35,452
  36,388
  37,368
  38,390
  36,959
  38,073
  39,235
  40,445
  41,706
  43,020
  44,387
  45,811
  47,291
  48,832
  50,436
  52,104
  53,839
  55,644
  57,521
  59,475
  61,506
  63,620
  65,818
  68,105
Operating income, $m
  -1,671
  -2,231
  -2,264
  -2,244
  -2,173
  -2,052
  -1,882
  -1,663
  -1,395
  -1,076
  -706
  2,215
  2,691
  3,222
  3,810
  4,458
  5,168
  5,942
  6,784
  7,696
  8,681
  9,744
  10,887
  12,115
  13,433
  14,844
  16,353
  17,966
  19,688
  21,524
  23,480
EBITDA, $m
  2,423
  2,362
  2,378
  2,453
  2,585
  2,774
  3,019
  3,320
  3,678
  4,092
  4,564
  5,096
  5,688
  6,344
  7,065
  7,853
  8,712
  9,643
  10,651
  11,739
  12,910
  14,169
  15,519
  16,965
  18,512
  20,165
  21,929
  23,810
  25,814
  27,946
  30,215
Interest expense (income), $m
  599
  576
  601
  629
  661
  696
  736
  779
  826
  877
  932
  991
  1,054
  1,121
  1,193
  1,269
  1,350
  1,436
  1,526
  1,622
  1,723
  1,830
  1,943
  2,062
  2,188
  2,320
  2,459
  2,605
  2,760
  2,922
  3,093
Earnings before tax, $m
  -1,905
  -2,807
  -2,865
  -2,873
  -2,834
  -2,749
  -2,618
  -2,442
  -2,221
  -1,953
  -1,638
  1,224
  1,637
  2,101
  2,618
  3,189
  3,818
  4,507
  5,258
  6,074
  6,958
  7,913
  8,944
  10,053
  11,245
  12,524
  13,894
  15,361
  16,928
  18,602
  20,387
Tax expense, $m
  -278
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  331
  442
  567
  707
  861
  1,031
  1,217
  1,420
  1,640
  1,879
  2,137
  2,415
  2,714
  3,036
  3,382
  3,751
  4,147
  4,571
  5,022
  5,505
Net income, $m
  -1,687
  -2,807
  -2,865
  -2,873
  -2,834
  -2,749
  -2,618
  -2,442
  -2,221
  -1,953
  -1,638
  894
  1,195
  1,534
  1,911
  2,328
  2,787
  3,290
  3,838
  4,434
  5,079
  5,777
  6,529
  7,339
  8,209
  9,143
  10,143
  11,213
  12,357
  13,579
  14,883

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  9,257
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  77,956
  70,144
  71,757
  73,601
  75,672
  77,966
  80,483
  83,224
  86,191
  89,388
  92,818
  96,488
  100,404
  104,573
  109,005
  113,707
  118,690
  123,965
  129,543
  135,436
  141,659
  148,226
  155,150
  162,449
  170,140
  178,240
  186,768
  195,744
  205,190
  215,127
  225,580
Adjusted assets (=assets-cash), $m
  68,699
  70,144
  71,757
  73,601
  75,672
  77,966
  80,483
  83,224
  86,191
  89,388
  92,818
  96,488
  100,404
  104,573
  109,005
  113,707
  118,690
  123,965
  129,543
  135,436
  141,659
  148,226
  155,150
  162,449
  170,140
  178,240
  186,768
  195,744
  205,190
  215,127
  225,580
Revenue / Adjusted assets
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
Average production assets, $m
  20,330
  20,732
  21,209
  21,754
  22,366
  23,044
  23,788
  24,598
  25,475
  26,420
  27,434
  28,519
  29,676
  30,909
  32,218
  33,608
  35,081
  36,640
  38,289
  40,031
  41,870
  43,811
  45,857
  48,015
  50,288
  52,682
  55,203
  57,856
  60,648
  63,585
  66,674
Working capital, $m
  8,868
  2,819
  2,884
  2,958
  3,042
  3,134
  3,235
  3,345
  3,464
  3,593
  3,731
  3,878
  4,036
  4,203
  4,381
  4,570
  4,771
  4,983
  5,207
  5,444
  5,694
  5,958
  6,236
  6,529
  6,839
  7,164
  7,507
  7,868
  8,247
  8,647
  9,067
Total debt, $m
  19,616
  17,179
  17,971
  18,876
  19,893
  21,019
  22,255
  23,601
  25,058
  26,627
  28,312
  30,114
  32,036
  34,084
  36,259
  38,568
  41,015
  43,605
  46,343
  49,237
  52,293
  55,517
  58,917
  62,501
  66,277
  70,254
  74,441
  78,848
  83,486
  88,366
  93,498
Total liabilities, $m
  36,878
  34,441
  35,233
  36,138
  37,155
  38,281
  39,517
  40,863
  42,320
  43,889
  45,574
  47,376
  49,298
  51,346
  53,521
  55,830
  58,277
  60,867
  63,605
  66,499
  69,555
  72,779
  76,179
  79,763
  83,539
  87,516
  91,703
  96,110
  100,748
  105,628
  110,760
Total equity, $m
  41,078
  35,703
  36,524
  37,463
  38,517
  39,685
  40,966
  42,361
  43,871
  45,498
  47,244
  49,112
  51,106
  53,228
  55,483
  57,877
  60,413
  63,098
  65,937
  68,937
  72,105
  75,447
  78,972
  82,687
  86,601
  90,724
  95,065
  99,634
  104,442
  109,500
  114,820
Total liabilities and equity, $m
  77,956
  70,144
  71,757
  73,601
  75,672
  77,966
  80,483
  83,224
  86,191
  89,387
  92,818
  96,488
  100,404
  104,574
  109,004
  113,707
  118,690
  123,965
  129,542
  135,436
  141,660
  148,226
  155,151
  162,450
  170,140
  178,240
  186,768
  195,744
  205,190
  215,128
  225,580
Debt-to-equity ratio
  0.478
  0.480
  0.490
  0.500
  0.520
  0.530
  0.540
  0.560
  0.570
  0.590
  0.600
  0.610
  0.630
  0.640
  0.650
  0.670
  0.680
  0.690
  0.700
  0.710
  0.730
  0.740
  0.750
  0.760
  0.770
  0.770
  0.780
  0.790
  0.800
  0.810
  0.810
Adjusted equity ratio
  0.480
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509
  0.509

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -1,687
  -2,807
  -2,865
  -2,873
  -2,834
  -2,749
  -2,618
  -2,442
  -2,221
  -1,953
  -1,638
  894
  1,195
  1,534
  1,911
  2,328
  2,787
  3,290
  3,838
  4,434
  5,079
  5,777
  6,529
  7,339
  8,209
  9,143
  10,143
  11,213
  12,357
  13,579
  14,883
Depreciation, amort., depletion, $m
  4,094
  4,593
  4,641
  4,696
  4,758
  4,827
  4,902
  4,984
  5,072
  5,168
  5,270
  2,881
  2,998
  3,122
  3,254
  3,395
  3,544
  3,701
  3,868
  4,044
  4,229
  4,425
  4,632
  4,850
  5,080
  5,321
  5,576
  5,844
  6,126
  6,423
  6,735
Funds from operations, $m
  6,015
  1,786
  1,776
  1,824
  1,925
  2,078
  2,284
  2,542
  2,852
  3,215
  3,632
  3,774
  4,193
  4,656
  5,165
  5,723
  6,331
  6,991
  7,706
  8,477
  9,308
  10,202
  11,161
  12,189
  13,289
  14,464
  15,719
  17,057
  18,483
  20,002
  21,618
Change in working capital, $m
  -246
  55
  65
  74
  83
  92
  101
  110
  119
  128
  138
  148
  157
  168
  178
  189
  200
  212
  224
  237
  250
  264
  278
  293
  309
  326
  343
  361
  380
  399
  420
Cash from operations, $m
  6,261
  4,077
  1,712
  1,750
  1,841
  1,986
  2,183
  2,431
  2,732
  3,086
  3,494
  3,627
  4,035
  4,488
  4,987
  5,534
  6,131
  6,779
  7,481
  8,240
  9,058
  9,938
  10,883
  11,895
  12,980
  14,138
  15,376
  16,696
  18,104
  19,602
  21,197
Maintenance CAPEX, $m
  0
  -2,054
  -2,094
  -2,142
  -2,197
  -2,259
  -2,328
  -2,403
  -2,485
  -2,573
  -2,669
  -2,771
  -2,881
  -2,998
  -3,122
  -3,254
  -3,395
  -3,544
  -3,701
  -3,868
  -4,044
  -4,229
  -4,425
  -4,632
  -4,850
  -5,080
  -5,321
  -5,576
  -5,844
  -6,126
  -6,423
New CAPEX, $m
  -2,055
  -402
  -477
  -545
  -612
  -678
  -744
  -810
  -877
  -945
  -1,014
  -1,085
  -1,157
  -1,232
  -1,310
  -1,390
  -1,473
  -1,559
  -1,649
  -1,742
  -1,839
  -1,941
  -2,047
  -2,157
  -2,273
  -2,394
  -2,521
  -2,653
  -2,792
  -2,937
  -3,089
Cash from investing activities, $m
  -624
  -2,456
  -2,571
  -2,687
  -2,809
  -2,937
  -3,072
  -3,213
  -3,362
  -3,518
  -3,683
  -3,856
  -4,038
  -4,230
  -4,432
  -4,644
  -4,868
  -5,103
  -5,350
  -5,610
  -5,883
  -6,170
  -6,472
  -6,789
  -7,123
  -7,474
  -7,842
  -8,229
  -8,636
  -9,063
  -9,512
Free cash flow, $m
  5,637
  1,621
  -859
  -938
  -968
  -951
  -889
  -782
  -629
  -432
  -188
  -229
  -3
  258
  555
  890
  1,263
  1,676
  2,132
  2,631
  3,176
  3,768
  4,411
  5,106
  5,856
  6,665
  7,534
  8,467
  9,468
  10,539
  11,685
Issuance/(repayment) of debt, $m
  -2,377
  716
  792
  905
  1,017
  1,126
  1,236
  1,346
  1,457
  1,569
  1,684
  1,802
  1,923
  2,047
  2,176
  2,309
  2,447
  2,590
  2,739
  2,894
  3,055
  3,224
  3,400
  3,584
  3,776
  3,977
  4,187
  4,407
  4,638
  4,879
  5,132
Issuance/(repurchase) of shares, $m
  -363
  0
  888
  971
  1,005
  993
  934
  831
  683
  489
  250
  295
  73
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -2,781
  716
  1,680
  1,876
  2,022
  2,119
  2,170
  2,177
  2,140
  2,058
  1,934
  2,097
  1,996
  2,047
  2,176
  2,309
  2,447
  2,590
  2,739
  2,894
  3,055
  3,224
  3,400
  3,584
  3,776
  3,977
  4,187
  4,407
  4,638
  4,879
  5,132
Total cash flow (excl. dividends), $m
  2,783
  2,336
  -67
  -32
  49
  175
  347
  564
  828
  1,138
  1,496
  1,573
  1,920
  2,305
  2,731
  3,199
  3,710
  4,266
  4,871
  5,525
  6,231
  6,992
  7,811
  8,690
  9,632
  10,642
  11,721
  12,875
  14,106
  15,419
  16,817
Retained Cash Flow (-), $m
  -5,445
  -729
  -821
  -939
  -1,054
  -1,168
  -1,281
  -1,395
  -1,510
  -1,627
  -1,746
  -1,868
  -1,993
  -2,122
  -2,256
  -2,393
  -2,536
  -2,685
  -2,839
  -3,000
  -3,167
  -3,342
  -3,525
  -3,715
  -3,914
  -4,123
  -4,341
  -4,569
  -4,808
  -5,058
  -5,320
Prev. year cash balance distribution, $m
 
  6,104
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  7,711
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  183
  475
  805
  1,173
  1,581
  2,031
  2,525
  3,064
  3,650
  4,286
  4,975
  5,718
  6,519
  7,381
  8,306
  9,298
  10,360
  11,497
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  7,393
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  70
  160
  236
  298
  344
  374
  389
  389
  378
  356
  326
  291
  254
  215
  178
  144
  113
  87
Current shareholders' claim on cash, %
  100
  100.0
  98.9
  97.7
  96.5
  95.4
  94.4
  93.5
  92.9
  92.4
  92.2
  91.9
  91.8
  91.8
  91.8
  91.8
  91.8
  91.8
  91.8
  91.8
  91.8
  91.8
  91.8
  91.8
  91.8
  91.8
  91.8
  91.8
  91.8
  91.8
  91.8

Schlumberger Limited supplies technology products and services to the oil and gas exploration and production industry worldwide. Its Reservoir Characterization Group segment provides reservoir imaging, monitoring, and development services; wireline technologies for open and cased-hole services; slickline services; exploration and production pressure and flow-rate measurement services comprising surface and downhole services; software integrated solutions, such as software, consulting, information management, and IT infrastructure services; consulting services for reservoir characterization, field development planning, and production enhancement; and petrotechnical data services and training solutions, as well as integrated management services. Its Drilling Group segment designs, manufactures, and markets roller cone and fixed cutter drill bits; supplies drilling fluid systems; provides pressure drilling and underbalanced drilling solutions, and environmental services and products; mud logging services; land drilling rigs and support services; and well planning and drilling, engineering, supervision, logistics, procurement, contracting, and drilling rig management services, as well as bottom-hole-assembly, borehole-enlargement technologies, impact tools, tubulars, and tubular services. Its Production Group segment provides well services comprising pressure pumping, well cementing, and stimulation services; coiled tubing equipment; well completion services and equipment that include packers, safety valves, and sand control technology, as well as completions technology and equipment; artificial lifts; and integrated production and production management services. Its Cameron Group segment offers integrated subsea production systems; surface systems; drilling equipment and services; and valve products and measurement systems. The company was formerly known as Socie´te´ de Prospection E´lectrique. Schlumberger Limited was founded in 1926 and is based in Houston, Texas.

FINANCIAL RATIOS  of  Schlumberger (SLB)

Valuation Ratios
P/E Ratio -53.9
Price to Sales 3.3
Price to Book 2.2
Price to Tangible Book
Price to Cash Flow 14.5
Price to Free Cash Flow 21.6
Growth Rates
Sales Growth Rate -21.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -14.7%
Cap. Spend. - 3 Yr. Gr. Rate -12.2%
Financial Strength
Quick Ratio 3
Current Ratio 0.1
LT Debt to Equity 40.1%
Total Debt to Equity 47.8%
Interest Coverage -2
Management Effectiveness
Return On Assets -1.6%
Ret/ On Assets - 3 Yr. Avg. 3.5%
Return On Total Capital -2.9%
Ret/ On T. Cap. - 3 Yr. Avg. 3.8%
Return On Equity -4.4%
Return On Equity - 3 Yr. Avg. 5.1%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 12.8%
Gross Margin - 3 Yr. Avg. 18.5%
EBITDA Margin 10%
EBITDA Margin - 3 Yr. Avg. 18.5%
Operating Margin -6%
Oper. Margin - 3 Yr. Avg. 6%
Pre-Tax Margin -6.8%
Pre-Tax Margin - 3 Yr. Avg. 5.7%
Net Profit Margin -6%
Net Profit Margin - 3 Yr. Avg. 3.7%
Effective Tax Rate 14.6%
Eff/ Tax Rate - 3 Yr. Avg. 21.9%
Payout Ratio -156.9%

SLB stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SLB stock intrinsic value calculation we used $27920 million for the last fiscal year's total revenue generated by Schlumberger. The default revenue input number comes from 2016 income statement of Schlumberger. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our SLB stock valuation model: a) initial revenue growth rate of 2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for SLB is calculated based on our internal credit rating of Schlumberger, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Schlumberger.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of SLB stock the variable cost ratio is equal to 40.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $18868 million in the base year in the intrinsic value calculation for SLB stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Schlumberger.

Corporate tax rate of 27% is the nominal tax rate for Schlumberger. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the SLB stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for SLB are equal to 72.8%.

Life of production assets of 9.9 years is the average useful life of capital assets used in Schlumberger operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for SLB is equal to 9.9%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $41078 million for Schlumberger - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 1382.04 million for Schlumberger is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Schlumberger at the current share price and the inputted number of shares is $90.3 billion.


Premium access subscription - $499/yr

please register and log in before paying
RELATED COMPANIES Price Int.Val. Rating
CVX Chevron 104.45 prem.  prem.
HAL Halliburton 41.90 prem.  prem.
BHI Baker Hughes 54.52 prem.  prem.
STO Statoil ADR 16.38 prem.  prem.
NOV National Oilwe 31.84 prem.  prem.
OII Oceaneering In 21.49 prem.  prem.
TTI Tetra Technolo 2.76 prem.  prem.
HP Helmerich&Payn 52.12 prem.  prem.

COMPANY NEWS

▶ Schlumberger Is Still Looking for a Bottom   [Jun-22-17 02:11PM  TheStreet.com]
▶ Energy on track for its worst week in six months   [Jun-21-17 05:29PM  CNBC Videos]
▶ Winners of oil's decline   [01:48PM  CNBC Videos]
▶ Schlumberger: Why Do You Hate Me?   [11:51AM  Barrons.com]
▶ Inside Schlumbergers 1-Year Returns as of June 16   [Jun-19-17 05:50PM  Market Realist]
▶ 3 Bargain Stocks You Can Buy Today   [Jun-14-17 12:09PM  Motley Fool]
▶ Fast Money final trades: AAPL, GS and more   [Jun-13-17 05:59PM  CNBC Videos]
▶ Seeking Value in the US: Schlumberger   [03:53PM  GuruFocus.com]
▶ Whats the Correlation between Schlumberger and Crude Oil?   [Jun-12-17 02:05PM  Market Realist]
▶ An Overview of Deepwater Drillers   [01:53PM  Investopedia]
▶ What Analysts Recommend for Schlumberger   [07:36AM  Market Realist]
▶ The Dark Side Of The Oil Tech Boom   [Jun-05-17 07:00PM  Oilprice.com]
▶ What Analysts Recommend for Energy Companies   [06:05PM  Market Realist]
▶ Whats Schlumbergers Net Debt after 1Q17?   [10:36AM  Market Realist]
▶ Rig Count Could Impact Schlumberger in 2017   [07:37AM  Market Realist]
▶ What Were Schlumbergers Drivers in 1Q17?   [Jun-01-17 04:05PM  Market Realist]
▶ Why Schlumbergers Stock Price Is Bearish   [12:46PM  Market Realist]
▶ Short Interest in Schlumberger on May 26   [May-30-17 01:35PM  Market Realist]
▶ Comparing Free Cash Flow for SLB, HAL, NOV, and WFT in 1Q17   [May-29-17 10:36AM  Market Realist]
▶ SLB, HAL, NOV, and WFT: Comparing Returns since 1Q17   [May-26-17 07:37AM  Market Realist]
▶ Analyzing Short Interest in Schlumberger on May 22   [May-24-17 07:36AM  Market Realist]
▶ What Was Schlumbergers Correlation with Crude Oil on May 22?   [May-23-17 02:36PM  Market Realist]
▶ Houston companies announce deals with Saudi Aramco   [May-22-17 03:59PM  American City Business Journals]
▶ Can 154% Growth And 3.6% Dividend Pump Up This Energy Stock?   [May-19-17 04:15PM  Investor's Business Daily]
▶ Halliburton, GE Among Firms Seen Getting Saudi Energy Deals   [May-17-17 08:33AM  Investor's Business Daily]
▶ Aramco Sees Deals Helping Sourcing Goal   [12:50AM  Bloomberg Video]
▶ Wall Street analysts are nailing it this year   [May-16-17 04:28PM  CNBC]
▶ Short Interest in Schlumberger on May 12   [07:38AM  Market Realist]
▶ Schlumbergers Correlation with Crude Oil on May 12   [May-15-17 04:35PM  Market Realist]
▶ Analyzing Schlumbergers Stock Price on May 12   [01:15PM  Market Realist]
▶ Oil prices jump on hopes of more production cuts   [10:51AM  Yahoo Finance Video]
▶ Textron Surges on Takeover Talk   [May-11-17 04:02PM  TheStreet.com]
▶ Occidental Petroleum to Test Texas Supertanker This Month   [May-10-17 03:59PM  TheStreet.com]
▶ 3 Hidden Gems in the Oil Sector   [May-09-17 08:11AM  Motley Fool]
▶ How Schlumberger Correlates with Crude Oil   [May-08-17 01:35PM  Market Realist]
▶ How Schlumberger Stock Has Performed   [10:32AM  Market Realist]
▶ Cramer: The Year of Investing Dangerously - in Oil   [May-05-17 07:01PM  TheStreet.com]
▶ Tech Breakthroughs May Save Deepwater Oil   [May-04-17 07:00PM  Oilprice.com]
Stock chart of SLB Financial statements of SLB Annual reports of SLB
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

FREE DOWNLOAD
Follow us on:   twitter   twitter   twitter   twitter

VALUATION THEORY       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2017. All rigths reserved.