SCHLUMBERGER LTD (NYSE:SLB) – A Strong Contender for GARP Investors

SCHLUMBERGER LTD (NYSE:SLB) stands out as a compelling pick for investors seeking growth at a reasonable price (GARP). The company, a leader in energy technology, meets key criteria from Peter Lynch’s investment strategy, combining solid growth, profitability, and an attractive valuation.

Why SLB Fits the GARP Approach

• Strong Earnings Growth: Over the past five years, SLB has delivered an impressive average EPS growth of 18.33%, comfortably within Lynch’s preferred range of 15-30%. This indicates sustainable expansion without excessive risk.
• Attractive Valuation: With a PEG ratio of 0.54 (well below Lynch’s threshold of 1), SLB’s earnings growth is undervalued relative to its price. The P/E ratio of 9.96 also suggests the stock is reasonably priced compared to industry peers.
• Healthy Profitability: SLB’s return on equity (ROE) of 21.47% and return on invested capital (ROIC) of 15.10% highlight efficient capital allocation and strong profitability—both key factors for long-term investors.
• Financial Stability: The company maintains a manageable debt-to-equity ratio of 0.54, below Lynch’s upper limit of 0.6. While liquidity metrics like the current ratio (1.24) could be stronger, SLB’s overall financial health remains sound.

Fundamental Snapshot

Our fundamental analysis report rates SLB 6 out of 10, noting its excellent profitability and reasonable valuation. Key strengths include high ROE and ROIC, while liquidity metrics present minor concerns. The company’s dividend yield of 3.38% adds appeal, though its payout has declined slightly in recent years.

For investors following a GARP strategy, SLB offers a balanced mix of growth potential and financial discipline.

Our Peter Lynch Strategy screener provides more stocks that align with this approach and is updated regularly.

Disclaimer

This is not investing advice! The article highlights observations at the time of writing, but you should conduct your own research before making investment decisions.