Intrinsic value of Schlumberger - SLB

Previous Close

$64.96

  Intrinsic Value

$86.78

stock screener

  Rating & Target

buy

+34%

Previous close

$64.96

 
Intrinsic value

$86.78

 
Up/down potential

+34%

 
Rating

buy

*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.

Please visit our new site that uses elements of artificial intelligence for stock valuation: artificial intelligence value of Schlumberger (SLB) stock.

STOCK VALUATION INPUT DATA

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

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, %
  -21.61
  12.60
  11.84
  11.16
  10.54
  9.99
  9.49
  9.04
  8.64
  8.27
  7.94
  7.65
  7.38
  7.15
  6.93
  6.74
  6.56
  6.41
  6.27
  6.14
  6.03
  5.92
  5.83
  5.75
  5.67
  5.61
  5.55
  5.49
  5.44
  5.40
  5.36
Revenue, $m
  27,810
  31,314
  35,022
  38,929
  43,032
  47,329
  51,820
  56,504
  61,383
  66,460
  71,740
  77,228
  82,931
  88,858
  95,017
  101,420
  108,078
  115,004
  122,212
  129,717
  137,534
  145,682
  154,177
  163,040
  172,290
  181,949
  192,040
  202,585
  213,609
  225,139
  237,202
Variable operating expenses, $m
 
  12,900
  14,131
  15,429
  16,792
  18,219
  19,710
  21,266
  22,887
  24,573
  26,327
  25,651
  27,545
  29,513
  31,559
  33,686
  35,897
  38,198
  40,592
  43,084
  45,681
  48,387
  51,209
  54,152
  57,225
  60,433
  63,784
  67,286
  70,948
  74,778
  78,784
Fixed operating expenses, $m
 
  18,255
  18,712
  19,179
  19,659
  20,150
  20,654
  21,170
  21,700
  22,242
  22,798
  23,368
  23,952
  24,551
  25,165
  25,794
  26,439
  27,100
  27,778
  28,472
  29,184
  29,913
  30,661
  31,428
  32,213
  33,019
  33,844
  34,690
  35,558
  36,447
  37,358
Total operating expenses, $m
  29,099
  31,155
  32,843
  34,608
  36,451
  38,369
  40,364
  42,436
  44,587
  46,815
  49,125
  49,019
  51,497
  54,064
  56,724
  59,480
  62,336
  65,298
  68,370
  71,556
  74,865
  78,300
  81,870
  85,580
  89,438
  93,452
  97,628
  101,976
  106,506
  111,225
  116,142
Operating income, $m
  -1,289
  159
  2,179
  4,320
  6,581
  8,960
  11,455
  14,067
  16,796
  19,645
  22,615
  28,209
  31,434
  34,793
  38,293
  41,940
  45,742
  49,707
  53,843
  58,161
  62,670
  67,382
  72,308
  77,460
  82,852
  88,498
  94,411
  100,608
  107,103
  113,915
  121,060
EBITDA, $m
  2,805
  4,970
  7,264
  9,694
  12,258
  14,954
  17,780
  20,738
  23,828
  27,051
  30,411
  33,912
  37,557
  41,354
  45,309
  49,429
  53,722
  58,198
  62,867
  67,739
  72,825
  78,139
  83,692
  89,499
  95,574
  101,933
  108,591
  115,566
  122,876
  130,539
  138,575
Interest expense (income), $m
  599
  576
  725
  882
  1,048
  1,222
  1,404
  1,595
  1,793
  2,000
  2,216
  2,440
  2,673
  2,915
  3,166
  3,428
  3,699
  3,982
  4,276
  4,582
  4,900
  5,232
  5,577
  5,938
  6,314
  6,706
  7,116
  7,544
  7,992
  8,460
  8,949
Earnings before tax, $m
  -1,905
  -417
  1,454
  3,439
  5,534
  7,738
  10,051
  12,472
  15,003
  17,644
  20,399
  25,769
  28,761
  31,879
  35,127
  38,513
  42,043
  45,725
  49,567
  53,579
  57,770
  62,150
  66,730
  71,522
  76,538
  81,791
  87,295
  93,063
  99,111
  105,455
  112,111
Tax expense, $m
  -278
  0
  393
  928
  1,494
  2,089
  2,714
  3,368
  4,051
  4,764
  5,508
  6,958
  7,766
  8,607
  9,484
  10,398
  11,352
  12,346
  13,383
  14,466
  15,598
  16,780
  18,017
  19,311
  20,665
  22,084
  23,570
  25,127
  26,760
  28,473
  30,270
Net income, $m
  -1,687
  -417
  1,062
  2,510
  4,040
  5,649
  7,337
  9,105
  10,952
  12,880
  14,891
  18,812
  20,996
  23,271
  25,643
  28,114
  30,691
  33,379
  36,184
  39,113
  42,172
  45,369
  48,713
  52,211
  55,873
  59,708
  63,725
  67,936
  72,351
  76,982
  81,841

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
  77,319
  86,473
  96,120
  106,252
  116,862
  127,950
  139,515
  151,562
  164,099
  177,136
  190,686
  204,769
  219,402
  234,611
  250,420
  266,860
  283,961
  301,758
  320,288
  339,591
  359,708
  380,685
  402,568
  425,408
  449,258
  474,172
  500,209
  527,430
  555,899
  585,684
Adjusted assets (=assets-cash), $m
  68,699
  77,319
  86,473
  96,120
  106,252
  116,862
  127,950
  139,515
  151,562
  164,099
  177,136
  190,686
  204,769
  219,402
  234,611
  250,420
  266,860
  283,961
  301,758
  320,288
  339,591
  359,708
  380,685
  402,568
  425,408
  449,258
  474,172
  500,209
  527,430
  555,899
  585,684
Revenue / Adjusted assets
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
Average production assets, $m
  20,330
  22,891
  25,601
  28,457
  31,456
  34,598
  37,880
  41,304
  44,871
  48,582
  52,442
  56,454
  60,623
  64,955
  69,458
  74,138
  79,005
  84,068
  89,337
  94,823
  100,538
  106,493
  112,704
  119,182
  125,944
  133,005
  140,381
  148,089
  156,148
  164,577
  173,395
Working capital, $m
  8,868
  3,100
  3,467
  3,854
  4,260
  4,686
  5,130
  5,594
  6,077
  6,580
  7,102
  7,646
  8,210
  8,797
  9,407
  10,041
  10,700
  11,385
  12,099
  12,842
  13,616
  14,423
  15,264
  16,141
  17,057
  18,013
  19,012
  20,056
  21,147
  22,289
  23,483
Total debt, $m
  19,616
  20,701
  25,196
  29,933
  34,908
  40,117
  45,561
  51,240
  57,155
  63,311
  69,712
  76,365
  83,279
  90,464
  97,932
  105,694
  113,766
  122,163
  130,901
  140,000
  149,477
  159,355
  169,654
  180,399
  191,614
  203,324
  215,556
  228,341
  241,706
  255,684
  270,309
Total liabilities, $m
  36,878
  37,963
  42,458
  47,195
  52,170
  57,379
  62,823
  68,502
  74,417
  80,573
  86,974
  93,627
  100,541
  107,726
  115,194
  122,956
  131,028
  139,425
  148,163
  157,262
  166,739
  176,617
  186,916
  197,661
  208,876
  220,586
  232,818
  245,603
  258,968
  272,946
  287,571
Total equity, $m
  41,078
  39,355
  44,015
  48,925
  54,082
  59,483
  65,126
  71,013
  77,145
  83,526
  90,162
  97,059
  104,227
  111,676
  119,417
  127,464
  135,832
  144,536
  153,595
  163,027
  172,852
  183,092
  193,769
  204,907
  216,533
  228,672
  241,353
  254,606
  268,462
  282,953
  298,113
Total liabilities and equity, $m
  77,956
  77,318
  86,473
  96,120
  106,252
  116,862
  127,949
  139,515
  151,562
  164,099
  177,136
  190,686
  204,768
  219,402
  234,611
  250,420
  266,860
  283,961
  301,758
  320,289
  339,591
  359,709
  380,685
  402,568
  425,409
  449,258
  474,171
  500,209
  527,430
  555,899
  585,684
Debt-to-equity ratio
  0.478
  0.530
  0.570
  0.610
  0.650
  0.670
  0.700
  0.720
  0.740
  0.760
  0.770
  0.790
  0.800
  0.810
  0.820
  0.830
  0.840
  0.850
  0.850
  0.860
  0.860
  0.870
  0.880
  0.880
  0.880
  0.890
  0.890
  0.900
  0.900
  0.900
  0.910
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
  -417
  1,062
  2,510
  4,040
  5,649
  7,337
  9,105
  10,952
  12,880
  14,891
  18,812
  20,996
  23,271
  25,643
  28,114
  30,691
  33,379
  36,184
  39,113
  42,172
  45,369
  48,713
  52,211
  55,873
  59,708
  63,725
  67,936
  72,351
  76,982
  81,841
Depreciation, amort., depletion, $m
  4,094
  4,811
  5,085
  5,373
  5,676
  5,994
  6,325
  6,671
  7,031
  7,406
  7,796
  5,702
  6,124
  6,561
  7,016
  7,489
  7,980
  8,492
  9,024
  9,578
  10,155
  10,757
  11,384
  12,039
  12,722
  13,435
  14,180
  14,959
  15,773
  16,624
  17,515
Funds from operations, $m
  6,015
  4,394
  6,147
  7,884
  9,716
  11,643
  13,663
  15,776
  17,984
  20,287
  22,687
  24,514
  27,119
  29,832
  32,659
  35,603
  38,672
  41,871
  45,208
  48,691
  52,327
  56,126
  60,097
  64,250
  68,595
  73,143
  77,905
  82,895
  88,124
  93,606
  99,356
Change in working capital, $m
  -246
  347
  367
  387
  406
  425
  445
  464
  483
  503
  523
  543
  565
  587
  610
  634
  659
  686
  714
  743
  774
  807
  841
  877
  916
  956
  999
  1,044
  1,091
  1,141
  1,194
Cash from operations, $m
  6,261
  4,047
  5,780
  7,497
  9,310
  11,217
  13,218
  15,312
  17,501
  19,784
  22,165
  23,971
  26,555
  29,246
  32,049
  34,969
  38,012
  41,185
  44,494
  47,948
  51,553
  55,320
  59,256
  63,373
  67,679
  72,186
  76,906
  81,851
  87,032
  92,465
  98,161
Maintenance CAPEX, $m
  0
  -2,054
  -2,312
  -2,586
  -2,874
  -3,177
  -3,495
  -3,826
  -4,172
  -4,532
  -4,907
  -5,297
  -5,702
  -6,124
  -6,561
  -7,016
  -7,489
  -7,980
  -8,492
  -9,024
  -9,578
  -10,155
  -10,757
  -11,384
  -12,039
  -12,722
  -13,435
  -14,180
  -14,959
  -15,773
  -16,624
New CAPEX, $m
  -2,055
  -2,561
  -2,710
  -2,856
  -2,999
  -3,141
  -3,283
  -3,424
  -3,567
  -3,712
  -3,860
  -4,012
  -4,169
  -4,332
  -4,503
  -4,681
  -4,867
  -5,063
  -5,269
  -5,486
  -5,715
  -5,956
  -6,210
  -6,479
  -6,762
  -7,061
  -7,376
  -7,708
  -8,059
  -8,428
  -8,818
Cash from investing activities, $m
  -624
  -4,615
  -5,022
  -5,442
  -5,873
  -6,318
  -6,778
  -7,250
  -7,739
  -8,244
  -8,767
  -9,309
  -9,871
  -10,456
  -11,064
  -11,697
  -12,356
  -13,043
  -13,761
  -14,510
  -15,293
  -16,111
  -16,967
  -17,863
  -18,801
  -19,783
  -20,811
  -21,888
  -23,018
  -24,201
  -25,442
Free cash flow, $m
  5,637
  -567
  757
  2,055
  3,436
  4,898
  6,441
  8,062
  9,762
  11,540
  13,398
  14,662
  16,683
  18,790
  20,985
  23,273
  25,657
  28,142
  30,734
  33,438
  36,261
  39,209
  42,289
  45,510
  48,878
  52,404
  56,096
  59,962
  64,015
  68,264
  72,720
Issuance/(repayment) of debt, $m
  -2,377
  4,238
  4,495
  4,737
  4,975
  5,210
  5,444
  5,679
  5,915
  6,155
  6,401
  6,653
  6,914
  7,185
  7,467
  7,762
  8,072
  8,397
  8,738
  9,098
  9,478
  9,878
  10,300
  10,745
  11,214
  11,710
  12,233
  12,784
  13,366
  13,978
  14,624
Issuance/(repurchase) of shares, $m
  -363
  4,798
  3,598
  2,400
  1,117
  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 from financing (excl. dividends), $m  
  -2,781
  9,036
  8,093
  7,137
  6,092
  5,210
  5,444
  5,679
  5,915
  6,155
  6,401
  6,653
  6,914
  7,185
  7,467
  7,762
  8,072
  8,397
  8,738
  9,098
  9,478
  9,878
  10,300
  10,745
  11,214
  11,710
  12,233
  12,784
  13,366
  13,978
  14,624
Total cash flow (excl. dividends), $m
  2,783
  8,470
  8,850
  9,192
  9,528
  10,108
  11,885
  13,741
  15,677
  17,696
  19,799
  21,315
  23,597
  25,975
  28,453
  31,035
  33,728
  36,539
  39,472
  42,536
  45,738
  49,086
  52,589
  56,254
  60,093
  64,114
  68,328
  72,747
  77,381
  82,242
  87,344
Retained Cash Flow (-), $m
  -5,445
  -4,798
  -4,660
  -4,910
  -5,157
  -5,401
  -5,644
  -5,887
  -6,132
  -6,381
  -6,636
  -6,897
  -7,168
  -7,449
  -7,741
  -8,047
  -8,368
  -8,704
  -9,059
  -9,432
  -9,825
  -10,240
  -10,677
  -11,139
  -11,626
  -12,139
  -12,681
  -13,253
  -13,856
  -14,491
  -15,161
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
 
  9,776
  4,190
  4,281
  4,371
  4,707
  6,241
  7,854
  9,545
  11,314
  13,163
  14,418
  16,430
  18,526
  20,711
  22,988
  25,361
  27,834
  30,413
  33,104
  35,913
  38,847
  41,912
  45,116
  48,467
  51,975
  55,647
  59,494
  63,525
  67,751
  72,183
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
 
  9,373
  3,836
  3,726
  3,599
  3,649
  4,529
  5,306
  5,966
  6,500
  6,901
  6,847
  7,011
  7,044
  6,953
  6,749
  6,445
  6,056
  5,601
  5,097
  4,563
  4,018
  3,478
  2,957
  2,469
  2,022
  1,624
  1,277
  983
  740
  544
Current shareholders' claim on cash, %
  100
  94.1
  90.3
  88.2
  87.2
  87.2
  87.2
  87.2
  87.2
  87.2
  87.2
  87.2
  87.2
  87.2
  87.2
  87.2
  87.2
  87.2
  87.2
  87.2
  87.2
  87.2
  87.2
  87.2
  87.2
  87.2
  87.2
  87.2
  87.2
  87.2
  87.2

Schlumberger N.V. provides technology for reservoir characterization, drilling, production and processing to the oil and gas industry. The Company's segments include Reservoir Characterization Group, Drilling Group, Production Group and Cameron Group. The Reservoir Characterization Group consists of the principal technologies involved in finding and defining hydrocarbon resources. The Drilling Group consists of the principal technologies involved in the drilling and positioning of oil and gas wells. The Production Group consists of the principal technologies involved in the lifetime production of oil and gas reservoirs and includes Well Services, Completions, Artificial Lift, Integrated Production Services (IPS) and Schlumberger Production Management (SPM). The Cameron Group consists of the principal technologies involved in pressure and flow control for drilling and intervention rigs, oil and gas wells and production facilities.

FINANCIAL RATIOS  of  Schlumberger (SLB)

Valuation Ratios
P/E Ratio -53.6
Price to Sales 3.2
Price to Book 2.2
Price to Tangible Book
Price to Cash Flow 14.4
Price to Free Cash Flow 21.5
Growth Rates
Sales Growth Rate -21.6%
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 14.2%
Gross Margin - 3 Yr. Avg. 19.2%
EBITDA Margin 10%
EBITDA Margin - 3 Yr. Avg. 18.5%
Operating Margin -4.6%
Oper. Margin - 3 Yr. Avg. 6.6%
Pre-Tax Margin -6.9%
Pre-Tax Margin - 3 Yr. Avg. 5.7%
Net Profit Margin -6.1%
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 $27810 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 12.6% 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 42.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $17810 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 73.1%.

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 1386.7 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 $90.1 billion.

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Financial statements of SLB
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