Intrinsic value of Schlumberger - SLB

Previous Close

$63.54

  Intrinsic Value

$91.12

stock screener

  Rating & Target

buy

+43%

Previous close

$63.54

 
Intrinsic value

$91.12

 
Up/down potential

+43%

 
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.

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 88.0

 

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
  13.00
  12.20
  11.48
  10.83
  10.25
  9.72
  9.25
  8.83
  8.44
  8.10
  7.79
  7.51
  7.26
  7.03
  6.83
  6.65
  6.48
  6.33
  6.20
  6.08
  5.97
  5.88
  5.79
  5.71
  5.64
  5.57
  5.52
  5.47
  5.42
  5.38
Revenue, $m
  27,920
  31,550
  35,399
  39,462
  43,737
  48,220
  52,908
  57,803
  62,905
  68,217
  73,742
  79,486
  85,456
  91,659
  98,106
  104,807
  111,773
  119,019
  126,558
  134,405
  142,578
  151,094
  159,971
  169,230
  178,891
  188,978
  199,512
  210,519
  222,024
  234,055
  246,639
Variable operating expenses, $m
 
  13,084
  14,375
  15,738
  17,173
  18,676
  20,249
  21,892
  23,603
  25,385
  27,239
  26,667
  28,670
  30,751
  32,914
  35,162
  37,499
  39,930
  42,459
  45,092
  47,834
  50,691
  53,669
  56,776
  60,017
  63,401
  66,935
  70,628
  74,488
  78,524
  82,746
Fixed operating expenses, $m
 
  18,113
  18,566
  19,030
  19,505
  19,993
  20,493
  21,005
  21,530
  22,069
  22,620
  23,186
  23,766
  24,360
  24,969
  25,593
  26,233
  26,889
  27,561
  28,250
  28,956
  29,680
  30,422
  31,182
  31,962
  32,761
  33,580
  34,420
  35,280
  36,162
  37,066
Total operating expenses, $m
  29,099
  31,197
  32,941
  34,768
  36,678
  38,669
  40,742
  42,897
  45,133
  47,454
  49,859
  49,853
  52,436
  55,111
  57,883
  60,755
  63,732
  66,819
  70,020
  73,342
  76,790
  80,371
  84,091
  87,958
  91,979
  96,162
  100,515
  105,048
  109,768
  114,686
  119,812
Operating income, $m
  -1,179
  353
  2,458
  4,694
  7,059
  9,550
  12,166
  14,906
  17,771
  20,763
  23,882
  29,633
  33,020
  36,548
  40,223
  44,052
  48,041
  52,200
  56,538
  61,063
  65,788
  70,723
  75,880
  81,272
  86,912
  92,816
  98,997
  105,471
  112,256
  119,369
  126,827
EBITDA, $m
  2,915
  5,172
  7,560
  10,095
  12,774
  15,595
  18,556
  21,656
  24,896
  28,278
  31,804
  35,478
  39,304
  43,289
  47,438
  51,759
  56,261
  60,952
  65,844
  70,947
  76,273
  81,834
  87,643
  93,716
  100,067
  106,712
  113,668
  120,952
  128,583
  136,580
  144,964
Interest expense (income), $m
  599
  576
  731
  894
  1,066
  1,247
  1,437
  1,635
  1,842
  2,058
  2,283
  2,517
  2,760
  3,013
  3,276
  3,548
  3,832
  4,127
  4,434
  4,753
  5,085
  5,431
  5,791
  6,167
  6,559
  6,968
  7,395
  7,841
  8,307
  8,794
  9,303
Earnings before tax, $m
  -1,905
  -223
  1,727
  3,800
  5,993
  8,303
  10,729
  13,271
  15,929
  18,704
  21,599
  27,116
  30,260
  33,535
  36,948
  40,503
  44,209
  48,073
  52,104
  56,311
  60,703
  65,292
  70,089
  75,105
  80,353
  85,848
  91,602
  97,631
  103,949
  110,575
  117,524
Tax expense, $m
  -278
  0
  466
  1,026
  1,618
  2,242
  2,897
  3,583
  4,301
  5,050
  5,832
  7,321
  8,170
  9,055
  9,976
  10,936
  11,937
  12,980
  14,068
  15,204
  16,390
  17,629
  18,924
  20,278
  21,695
  23,179
  24,732
  26,360
  28,066
  29,855
  31,732
Net income, $m
  -1,687
  -223
  1,261
  2,774
  4,375
  6,061
  7,832
  9,688
  11,628
  13,654
  15,767
  19,794
  22,090
  24,481
  26,972
  29,567
  32,273
  35,094
  38,036
  41,107
  44,313
  47,663
  51,165
  54,827
  58,658
  62,669
  66,869
  71,270
  75,883
  80,720
  85,793

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
  77,708
  87,189
  97,198
  107,727
  118,767
  130,316
  142,372
  154,939
  168,021
  181,630
  195,778
  210,482
  225,761
  241,640
  258,145
  275,304
  293,150
  311,719
  331,048
  351,178
  372,152
  394,018
  416,823
  440,619
  465,462
  491,408
  518,519
  546,857
  576,489
  607,486
Adjusted assets (=assets-cash), $m
  68,699
  77,708
  87,189
  97,198
  107,727
  118,767
  130,316
  142,372
  154,939
  168,021
  181,630
  195,778
  210,482
  225,761
  241,640
  258,145
  275,304
  293,150
  311,719
  331,048
  351,178
  372,152
  394,018
  416,823
  440,619
  465,462
  491,408
  518,519
  546,857
  576,489
  607,486
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
  22,968
  25,770
  28,729
  31,841
  35,104
  38,517
  42,081
  45,795
  49,662
  53,684
  57,866
  62,212
  66,728
  71,421
  76,299
  81,371
  86,646
  92,134
  97,847
  103,797
  109,996
  116,459
  123,199
  130,233
  137,576
  145,245
  153,258
  161,633
  170,392
  179,553
Working capital, $m
  8,868
  3,123
  3,504
  3,907
  4,330
  4,774
  5,238
  5,723
  6,228
  6,753
  7,300
  7,869
  8,460
  9,074
  9,712
  10,376
  11,066
  11,783
  12,529
  13,306
  14,115
  14,958
  15,837
  16,754
  17,710
  18,709
  19,752
  20,841
  21,980
  23,171
  24,417
Total debt, $m
  19,616
  20,893
  25,548
  30,462
  35,632
  41,053
  46,723
  52,643
  58,813
  65,236
  71,918
  78,865
  86,085
  93,587
  101,383
  109,487
  117,912
  126,675
  135,792
  145,283
  155,166
  165,465
  176,201
  187,398
  199,082
  211,280
  224,019
  237,331
  251,245
  265,794
  281,014
Total liabilities, $m
  36,878
  38,155
  42,810
  47,724
  52,894
  58,315
  63,985
  69,905
  76,075
  82,498
  89,180
  96,127
  103,347
  110,849
  118,645
  126,749
  135,174
  143,937
  153,054
  162,545
  172,428
  182,727
  193,463
  204,660
  216,344
  228,542
  241,281
  254,593
  268,507
  283,056
  298,276
Total equity, $m
  41,078
  39,554
  44,379
  49,474
  54,833
  60,453
  66,331
  72,468
  78,864
  85,523
  92,450
  99,651
  107,135
  114,913
  122,995
  131,396
  140,130
  149,214
  158,665
  168,503
  178,750
  189,426
  200,555
  212,163
  224,275
  236,920
  250,127
  263,926
  278,350
  293,433
  309,210
Total liabilities and equity, $m
  77,956
  77,709
  87,189
  97,198
  107,727
  118,768
  130,316
  142,373
  154,939
  168,021
  181,630
  195,778
  210,482
  225,762
  241,640
  258,145
  275,304
  293,151
  311,719
  331,048
  351,178
  372,153
  394,018
  416,823
  440,619
  465,462
  491,408
  518,519
  546,857
  576,489
  607,486
Debt-to-equity ratio
  0.478
  0.530
  0.580
  0.620
  0.650
  0.680
  0.700
  0.730
  0.750
  0.760
  0.780
  0.790
  0.800
  0.810
  0.820
  0.830
  0.840
  0.850
  0.860
  0.860
  0.870
  0.870
  0.880
  0.880
  0.890
  0.890
  0.900
  0.900
  0.900
  0.910
  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
  -223
  1,261
  2,774
  4,375
  6,061
  7,832
  9,688
  11,628
  13,654
  15,767
  19,794
  22,090
  24,481
  26,972
  29,567
  32,273
  35,094
  38,036
  41,107
  44,313
  47,663
  51,165
  54,827
  58,658
  62,669
  66,869
  71,270
  75,883
  80,720
  85,793
Depreciation, amort., depletion, $m
  4,094
  4,819
  5,102
  5,401
  5,715
  6,045
  6,390
  6,750
  7,125
  7,515
  7,922
  5,845
  6,284
  6,740
  7,214
  7,707
  8,219
  8,752
  9,306
  9,884
  10,485
  11,111
  11,764
  12,444
  13,155
  13,897
  14,671
  15,481
  16,327
  17,211
  18,137
Funds from operations, $m
  6,015
  4,596
  6,363
  8,175
  10,090
  12,106
  14,222
  16,437
  18,753
  21,169
  23,689
  25,640
  28,374
  31,221
  34,186
  37,274
  40,492
  43,846
  47,342
  50,990
  54,798
  58,774
  62,928
  67,271
  71,813
  76,565
  81,541
  86,751
  92,210
  97,931
  103,929
Change in working capital, $m
  -246
  359
  381
  402
  423
  444
  464
  485
  505
  526
  547
  569
  591
  614
  638
  663
  690
  717
  746
  777
  809
  843
  879
  917
  956
  999
  1,043
  1,090
  1,139
  1,191
  1,246
Cash from operations, $m
  6,261
  4,237
  5,982
  7,773
  9,667
  11,662
  13,758
  15,953
  18,248
  20,644
  23,142
  25,071
  27,783
  30,607
  33,548
  36,611
  39,802
  43,128
  46,596
  50,213
  53,989
  57,931
  62,049
  66,354
  70,856
  75,567
  80,498
  85,661
  91,071
  96,740
  102,684
Maintenance CAPEX, $m
  0
  -2,054
  -2,320
  -2,603
  -2,902
  -3,216
  -3,546
  -3,891
  -4,251
  -4,626
  -5,016
  -5,423
  -5,845
  -6,284
  -6,740
  -7,214
  -7,707
  -8,219
  -8,752
  -9,306
  -9,884
  -10,485
  -11,111
  -11,764
  -12,444
  -13,155
  -13,897
  -14,671
  -15,481
  -16,327
  -17,211
New CAPEX, $m
  -2,055
  -2,638
  -2,802
  -2,958
  -3,112
  -3,263
  -3,413
  -3,563
  -3,714
  -3,867
  -4,022
  -4,182
  -4,346
  -4,516
  -4,693
  -4,878
  -5,072
  -5,275
  -5,488
  -5,713
  -5,950
  -6,199
  -6,463
  -6,740
  -7,033
  -7,343
  -7,669
  -8,013
  -8,376
  -8,758
  -9,162
Cash from investing activities, $m
  -624
  -4,692
  -5,122
  -5,561
  -6,014
  -6,479
  -6,959
  -7,454
  -7,965
  -8,493
  -9,038
  -9,605
  -10,191
  -10,800
  -11,433
  -12,092
  -12,779
  -13,494
  -14,240
  -15,019
  -15,834
  -16,684
  -17,574
  -18,504
  -19,477
  -20,498
  -21,566
  -22,684
  -23,857
  -25,085
  -26,373
Free cash flow, $m
  5,637
  -455
  859
  2,211
  3,653
  5,183
  6,798
  8,499
  10,283
  12,151
  14,103
  15,467
  17,592
  19,807
  22,114
  24,519
  27,024
  29,634
  32,356
  35,194
  38,155
  41,247
  44,476
  47,850
  51,378
  55,069
  58,932
  62,977
  67,214
  71,655
  76,311
Issuance/(repayment) of debt, $m
  -2,377
  4,430
  4,655
  4,915
  5,169
  5,421
  5,670
  5,920
  6,170
  6,424
  6,682
  6,947
  7,220
  7,502
  7,797
  8,104
  8,425
  8,763
  9,117
  9,491
  9,884
  10,298
  10,736
  11,197
  11,684
  12,198
  12,740
  13,311
  13,914
  14,550
  15,219
Issuance/(repurchase) of shares, $m
  -363
  4,803
  3,565
  2,321
  984
  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
  9,233
  8,220
  7,236
  6,153
  5,421
  5,670
  5,920
  6,170
  6,424
  6,682
  6,947
  7,220
  7,502
  7,797
  8,104
  8,425
  8,763
  9,117
  9,491
  9,884
  10,298
  10,736
  11,197
  11,684
  12,198
  12,740
  13,311
  13,914
  14,550
  15,219
Total cash flow (excl. dividends), $m
  2,783
  8,777
  9,079
  9,446
  9,807
  10,604
  12,469
  14,418
  16,453
  18,575
  20,785
  22,413
  24,811
  27,309
  29,911
  32,622
  35,449
  38,397
  41,473
  44,684
  48,039
  51,545
  55,212
  59,048
  63,063
  67,267
  71,672
  76,288
  81,128
  86,205
  91,530
Retained Cash Flow (-), $m
  -5,445
  -4,803
  -4,826
  -5,095
  -5,359
  -5,620
  -5,878
  -6,137
  -6,396
  -6,659
  -6,927
  -7,201
  -7,484
  -7,777
  -8,082
  -8,401
  -8,734
  -9,084
  -9,451
  -9,838
  -10,246
  -10,676
  -11,129
  -11,608
  -12,112
  -12,645
  -13,207
  -13,799
  -14,424
  -15,083
  -15,777
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
 
  10,079
  4,254
  4,352
  4,448
  4,984
  6,590
  8,282
  10,057
  11,916
  13,858
  15,212
  17,327
  19,532
  21,829
  24,222
  26,715
  29,313
  32,021
  34,846
  37,793
  40,869
  44,082
  47,440
  50,950
  54,622
  58,465
  62,489
  66,704
  71,122
  75,753
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
 
  9,663
  3,894
  3,787
  3,662
  3,863
  4,783
  5,595
  6,286
  6,845
  7,265
  7,224
  7,394
  7,426
  7,328
  7,111
  6,789
  6,378
  5,897
  5,365
  4,802
  4,227
  3,658
  3,109
  2,595
  2,125
  1,706
  1,341
  1,032
  776
  570
Current shareholders' claim on cash, %
  100
  94.0
  90.2
  88.0
  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 -52.4
Price to Sales 3.2
Price to Book 2.2
Price to Tangible Book
Price to Cash Flow 14.1
Price to Free Cash Flow 21
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 14.5%
Gross Margin - 3 Yr. Avg. 19.4%
EBITDA Margin 10%
EBITDA Margin - 3 Yr. Avg. 18.5%
Operating Margin -4.2%
Oper. Margin - 3 Yr. Avg. 6.9%
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 13% 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 42.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $17671 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 1384.48 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 $88.0 billion.

RELATED COMPANIES Price Int.Val. Rating
CVX Chevron 119.92 18.60  str.sell
HAL Halliburton 43.99 118.92  str.buy
STO Statoil ADR 20.13 16.36  hold
NOV National Oilwe 32.62 5.18  str.sell
OII Oceaneering In 18.84 13.46  sell
TTI Tetra Technolo 3.92 0.49  str.sell
HP Helmerich&Payn 58.01 17.27  str.sell

COMPANY NEWS

▶ Bitcoin's Wild Ride: Cramer's Top Takeaways   [Dec-07-17 08:57PM  TheStreet.com]
▶ Whats Schlumbergers Dividend Yield?   [10:33AM  Market Realist]
▶ Schlumbergers Free Cash Flow in 3Q17   [09:04AM  Market Realist]
▶ Rising Rig Count Could Add to Schlumbergers Tally   [Nov-30-17 03:00PM  Market Realist]
▶ What Were Schlumbergers Drivers in 3Q17?   [11:55AM  Market Realist]
▶ Schlumberger: Managements Views after 3Q17   [11:55AM  Market Realist]
▶ OPEC's latest deal with Russia could fall apart and tank crude oil   [Nov-28-17 11:03AM  Yahoo Finance Video]
▶ 5 Ways To Play 2018s Oil Boom   [Nov-27-17 07:30PM  Oilprice.com]
▶ Exxon Mobil's new strategy: lean and mean   [12:05PM  Yahoo Finance Video]
▶ What Caused That Mysterious Oil Price Jump?   [Nov-25-17 01:40PM  TheStreet.com]
▶ Is Schlumberger Limited (SLB) Undervalued?   [Nov-23-17 09:41AM  Simply Wall St.]
▶ Best-In-Class NYSE Energy Dividend Stocks   [08:03AM  Simply Wall St.]
▶ How Did Schlumberger React to Price of Crude Oil Last Week?   [Nov-20-17 03:30PM  Market Realist]
▶ Schlumbergers 1-Week Returns on November 17   [12:26PM  Market Realist]
▶ How This One Company Predicted Oil's Surprising Rebound   [Nov-17-17 11:41AM  TheStreet.com]
▶ How Schlumberger Reacted to Crude Oil Prices Last Week   [Nov-13-17 04:30PM  Market Realist]
▶ Schlumbergers Next 7-Day Stock Price Forecast   [03:00PM  Market Realist]
▶ Schlumbergers 1-Week Returns on November 10   [01:29PM  Market Realist]
▶ 3 Top Quality Stocks for November 2017   [06:00AM  Investopedia]
▶ A Look at OFS Giants Relative Valuations   [Nov-10-17 09:03AM  Market Realist]
▶ SLB, HAL, BHGE, and NOV: How Do Debt Positions Stack Up?   [Nov-09-17 05:19PM  Market Realist]
▶ Comparing CSXs Shipments with Rival NSC in Week 43   [Nov-07-17 04:30PM  Market Realist]
▶ Why crude oil could easily soar to $70/bbl   [10:37AM  Yahoo Finance Video]
▶ As Oil Jumps, These Stocks Are The Hottest Now Not Shale Or Majors   [Nov-06-17 04:10PM  Investor's Business Daily]
▶ How Schlumberger Stock Performed Last Week   [08:41AM  Market Realist]
▶ 7 Unloved Stocks That Deserve a Second Chance   [Nov-03-17 03:18PM  InvestorPlace]
▶ Oil Is Strong but Schlumberger Limited Stinks   [Nov-02-17 11:56AM  InvestorPlace]
▶ Saudi $2T Aramco IPO: 2018 or bust   [01:17PM  Yahoo Finance Video]
▶ Trading oil after Aramco IPO: 3 plays   [05:00PM  CNBC Videos]
Financial statements 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.