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

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

Why SLB Fits the GARP Approach

• Strong Earnings Growth: SLB has delivered an impressive 5-year 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 0.60 (well below Lynch’s threshold of 1), SLB appears undervalued relative to its growth potential. Its P/E ratio of 11.04 also suggests reasonable pricing compared to industry peers.
• Healthy Profitability: The company’s return on equity (ROE) of 21.47% exceeds Lynch’s 15% benchmark, reflecting efficient use of shareholder capital.
• Moderate Debt: SLB’s debt-to-equity ratio of 0.54 aligns with Lynch’s preference for financially stable companies, though he favored even lower leverage.
• Liquidity Check: A current ratio of 1.24 ensures the company can meet short-term obligations, though liquidity metrics are slightly weaker than industry averages.

Fundamental Highlights

Our fundamental analysis report rates SLB a 6/10, noting strengths in profitability and valuation but flagging minor concerns in financial health. Key takeaways:

• Profitability: SLB outperforms most peers in ROE (21.47%) and ROIC (15.10%).
• Dividend: A 3.20% yield is sustainable, though payouts have declined slightly in recent years.
• Valuation: Trading below S&P 500 and industry P/E averages, SLB appears reasonably priced.

For more stocks matching this strategy, explore our Peter Lynch screener, updated daily.

Disclaimer

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