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Investment thesis
I have been bullish on Schlumberger Limited (NYSE:SLB) for a while and did not expect we would see another entry point in the $40s. However, terrible energy (XLE) and oilfield services (OIH) sentiment has brought us back to oversold levels not seen since the regional banking (IAT) crisis:
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A major correction naturally raises questions about the validity of the fundamental thesis. However, Schlumberger’s earnings beat yesterday along with bullish guidance and a dividend increase should dispel any concerns about the business.
Yes, there is pressure on oilfield services (or OFS) in North America onshore, but that is 20% of SLB’s business and is more than offset by the ongoing strength in international and offshore markets where SLB conducts the remaining 80% of its activity.
I think the combination of a sound business and negative sentiment makes…
