SLB LIMITED/NV (SLB): what the price requires
At today's price, SLB LIMITED/NV (SLB) is priced for +7.6% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/SLB
Headline
| Field | Value |
|---|---|
| Ticker | SLB |
| Company | SLB LIMITED/NV |
| Sector / Industry | Energy |
| Current price | $47.40/sh |
| Composition | Services 59% / Product sales 41% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Implied growth | 7.6% |
| Multiple paid | 12x operating income |
Solve inputs: computed at a 10.5% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~5.4pp.
Reconcile: at the x-ray's 9.3% required return this reads ~0.9%/yr; the models below use their own rates.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | +0.16σ |
| cohort percentile (of 45 peers) | 31 |
| implied end-window share | 0% |
Valuation X-Ray
Every valuation family lands below the price. The price therefore requires assumptions beyond what those standard frames encode.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 1.69x | 4 | expensive |
| Earnings | 1.86x | 4 | expensive |
| Relative | 1.93x | 3 | expensive |
| Growth | 1.39x | 3 | expensive |
Families that call it expensive: Asset, Earnings, Relative
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.3%); the inversion above states its own rate.
Per-Model Detail (n=14)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $34.15 | 1.39x | yes | FCF base $4.7B, growth -0% (input: historical growth), terminal g 0.5%, WACC 8.3%, 5yr projection |
| DCF Exit Multiple | Growth | $45.83 | 1.03x | yes | Exit EV/EBITDA: 26.3x / 29.3x / 32.3x (bear / base = today's held flat / bull), 5yr |
| Relative Valuation | Relative | $24.55 | 1.93x | yes | P/E 13.47x (blended: static sector reference 10x + trailing (TTM) 22x), scenarios: 10.1x / 13.5x / 16.2x (bear / base = reference held flat / bull), EV/EBITDA 12.98x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $23.76 | 1.99x | yes | BV/sh $17.28, ROE (TTM) 12.7%, ke 9.3% |
| Two-Stage Excess Return | Asset | $27.64 | 1.71x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $30.08 | 1.58x | yes | Rev $35.9B, growth -0% (input: historical growth; tapered), Terminal P/S: 1.5x / 2.0x / 2.4x (bear / base = today's held flat / bull, cap 6x) |
| Growth-Adjusted P/E | Relative | — | — | no | — |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $16.48 | 2.88x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $3.30B × (1−20%) / WACC 8.3% → EPV (no growth) |
| Residual Income | Asset | $28.45 | 1.67x | yes | BV $17.28 + 5yr PV of (ROE (TTM) 12.7% − Kₑ 9.3%) × BV; BV grows 8.3%/yr |
| Graham Number | Asset | $29.71 | 1.60x | yes | √(22.5 × EPS $2.27 × BVPS $17.28) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $6.12 | 7.75x | yes | EBITDA $2.69B × sector EV/EBITDA 6.0x |
| FCF Yield | Earnings | $28.85 | 1.64x | yes | FCF $4677.0M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $26.41 | 1.79x | yes | SBC-adj FCF $4.33B (FCF $4.68B − SBC $0.34B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $1.90 | 24.95x | yes | EPS $2.27 × (8.5 + 2×-5.0%) × (4.4 / 5.3%) (excluded from median) |
| ROIC-Justified P/B | Asset | — | — | no | — |
| P/Sales Sector | Relative | $28.47 | 1.66x | yes | Revenue $35.94B × sector P/S 1.2x |
| PEG Fair Value | Relative | — | — | no | — |
| Earnings Yield | Earnings | $24.54 | 1.93x | yes | EPS $2.27 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Share count CAGR (dilution) | 1.4% |
| Burning cash | no |
Operating profit is negative or near zero and the company has no demonstrated through-cycle (mid-cycle) operating margin to normalize against, so years-to-repay cannot be computed honestly.
Operating profit is negative or near zero and there is no demonstrated through-cycle (mid-cycle) operating margin to normalize against, so interest coverage cannot be computed honestly.
Bullet Takeaways
- SLB is the largest oilfield-services franchise, now tilted toward steadier production-linked revenue by the ChampionX deal, which the 10-K sizes at "approximately $3.4 billion" of 2024 revenue (accession 0001193125-26-021017); Production Systems grew 23% in Q1 2026 while the core business ex-acquisition shrank 7%.
- The biggest near-term risk is the Middle East, where conflict-driven demobilizations cost roughly 6 to 9 cents of Q1 EPS and management guided disruptions persisting into mid-Q2, right as every static valuation method already reads the price as rich against trailing earnings.
- Watch the July 24, 2026 second-quarter report for Middle East restoration pace, North America holding flat as guided, and whether free cash flow (about $4.7 billion trailing) keeps covering the dividend and buyback without leaning on the balance sheet.
Bull Case
Every family of valuation method lands below SLB's $47.77 price (July 2026), and the bull case is about why the market keeps paying anyway: the methods are all reading a trailing year that management and most of the street treat as a trough. Trailing earnings carry a first quarter in which Middle East conflict disruptions forced SLB to demobilize operations in several countries, clipping roughly 6 to 9 cents from quarterly earnings per share. The core business excluding acquisitions shrank 7% in that quarter, yet the market is paying about 12 times operating income, a multiple that requires only about 7% annual operating growth for five years, a pace within what SLB has recently delivered and a multiple sitting in the lower half of its own peer range. The market is underwriting normalization, not heroics.
The portfolio SLB normalizes into is broader than the one that entered the downturn. The ChampionX acquisition closed in mid-2025 and brought a production-chemicals franchise the 10-K sizes precisely: "ChampionX recorded revenue of approximately $3.4 billion in 2024 and $2.0 billion during the period from January 1, 2025 to July 31, 2025" (FY2025 10-K, accession 0001193125-26-021017). That acquisition is already visible in the mix: Production Systems revenue rose 23% year over year to $3.51 billion in the first quarter. Production chemistry earns on producing wells rather than new drilling, which shifts revenue toward the steadier end of the cycle. On top sits the digital layer, where the filing describes software "agnostic to equipment provider" that enables "automation and autonomy to reduce costs and improve performance" (accession 0001193125-26-021017); software sold to an industry cutting costs is a business that grows precisely when drilling budgets do not.
The financial engine underneath is what lets a cyclical wait out its own cycle. SLB generated about $4.7 billion of free cash flow over the trailing year against net debt of $6.9 billion, roughly one year of operating income, with interest covered about 12 times. The filing states the priority order for that cash plainly: reinvest for growth or return it "to shareholders through dividend payments or share repurchases" (accession 0001193125-26-021017). A market-share leader coming off a demonstrably disrupted quarter, generating that kind of cash, priced at a below-peer multiple, is the setup where patience has historically been paid: the bet is that Middle East activity restores, deepwater long-cycle projects keep sanctioning, and the trailing year proves to be the wrong base to capitalize.
Bear Case
The competition is not standing still while SLB waits for its cycle. Halliburton's own filing reports total revenue down 3% in 2025, international down 2%, and North America down 6% (HAL FY2025 10-K, accession 0000045012-26-000015), which is what an industry-wide activity contraction looks like from the other side of the bidding table: two scaled service giants and a long tail of regional players chasing fewer rigs with idle crews. In that environment pricing erodes first and recovers last. SLB's first quarter showed the same gravity, with core revenue excluding the ChampionX contribution down 7% year over year and Well Construction, its largest drilling-linked division, down 6% to $2.8 billion. Acquired revenue is masking a shrinking base.
The structural warning sits in SLB's own risk factors: "The oil and gas industry has historically experienced periodic downturns, which have been characterized by diminished demand for our products and services and downward pressure on the prices that we are able to charge" (FY2025 10-K, accession 0001193125-26-021017). That sentence is doing a lot of work at today's price, because no standard valuation family reaches $47.77. The steadier reads are far below: earnings-power methods land around half the price, peer and sector multiples similarly, and even forward-looking cash-flow projections built on the trailing year's flat revenue fall short. Valued on its five-year average operating profit, which includes both trough and recovery years, the price is nearly triple what the business has demonstrated through a cycle. The market is paying trough-multiple prices for peak-adjacent earnings, which is the classic cyclical trap in reverse.
Integration and geography add execution risk to cycle risk. The filing is explicit that "The success of the ChampionX acquisition will depend on, among other things, our ability to combine our business with that of ChampionX in a manner that facilitates growth opportunities and realizes anticipated synergies" (accession 0001193125-26-021017), and the all-stock structure has the share count drifting up about 1.4% a year while integration proceeds. Meanwhile the Middle East, SLB's premier growth geography of the last cycle, is now the source of demobilizations, suspended travel, and an explicit warning that disruptions persist into the second quarter. If restoration takes quarters rather than weeks, or if North American activity stays flat as guided, the roughly 7% annual operating growth the price requires has to come from a shrinking core, a diluting share count, and a region under conflict. That is a lot of things going right for a stock every static method already calls expensive.
Valuation
The market pays about 12 times operating income for SLB, and inverted into an assumption, $47.77 requires operating growth of roughly 7% a year for five years. Two facts frame that requirement honestly. It is within what SLB has recently delivered, and the multiple sits in the lower half of the oilfield-services peer range, so the priced-in assumption reads as broadly consistent with plausible outcomes for the sector leader. What makes the picture unusual is that despite the moderate requirement, not one valuation family actually reaches the price on trailing numbers: peer multiples land around half of it, earnings-power reads similarly, asset-based views about 40% below, and even the forward projections fall modestly short, with the exit-multiple variant coming closest at $46 against the $47.77 print. When every family is short but none catastrophically, the price is a bet that the trailing base year understates the business, which is precisely the company's own account of a quarter disrupted by Middle East demobilizations.
The composition of revenue is shifting under the multiple. Production Systems grew 23% to $3.51 billion in the first quarter on the ChampionX consolidation, while Well Construction fell 6% to $2.8 billion. The filing quantifies what was bought: "ChampionX recorded revenue of approximately $3.4 billion in 2024" (FY2025 10-K, accession 0001193125-26-021017), production-linked revenue that cushions drilling cyclicality. The 10-K also notes 2024 full-year revenue of $36.3 billion grew 10% with "Approximately 46% of this increase" coming from the Aker subsea acquisition (accession 0001193125-26-021017); acquisitions have been carrying a meaningful share of SLB's reported growth for two years running, which is worth holding in mind when extending the growth rate forward.
Solvency does not constrain the story. Net debt of about $6.9 billion runs near 1.1 times trailing pre-tax operating income, interest is covered about 12 times, and free cash flow of roughly $4.7 billion funds the dividend, buybacks, and integration without strain. The share count edging up about 1.4% a year from the all-stock ChampionX deal is the one dilutive note. The decisive question the price poses is narrow: whether the first quarter's disrupted, core-shrinking print is the trough of this cycle or a preview of a flatter one. The July 24 second-quarter report answers a third of it.
Catalysts
July 24, 2026 is the date that matters: SLB reports second-quarter results at 7:00 a.m. Eastern with the call at 9:30. Management has pre-framed the quarter: Middle East disruptions persisting into mid-quarter, sequential declines there offset by growth in other international markets, and flat North America revenue. The print therefore scores three things at once: how fast demobilized Middle East operations restore, whether deepwater and other long-cycle international work is absorbing the slack, and the first clean quarters of ChampionX inside the Production Systems line, which grew 23% year over year to $3.51 billion in Q1.
The first quarter set a low bar. Revenue of $8.72 billion grew 3% year over year, but net income fell 6% to $752 million with GAAP earnings of $0.50 per share, and the conflict disruptions carried an estimated 6-to-9-cent EPS cost as SLB suspended travel through the region and pulled crews in several countries at customers' request. Management framed the recovery path around supporting customers as they restore production capacity, alongside increased short-cycle investment in North and Latin America and long-cycle deepwater developments.
The street remains firmly constructive, with 18 of 25 covering analysts at Strong Buy, a stance that leans on the same normalization thesis the growth-crediting math requires. The watch items beyond the print: any announced restoration of Middle East activity (each country remobilized is direct revenue), ChampionX synergy milestones, and the capital-return cadence, since the dividend plus buyback program is the mechanism that pays holders while the cycle argument resolves.
Peer Cohorts (Per Segment, With Filing Citations)
Digital (reported)
- HAL (HALLIBURTON COMPANY)
- (no filing in the citation store)
- OII (OCEANEERING INTERNATIONAL INC)
- (no filing in the citation store)
- LBRT (Liberty Energy Inc.)
- (no filing in the citation store)
Reservoir Performance (reported)
- HAL (HALLIBURTON COMPANY)
- (no filing in the citation store)
- LBRT (Liberty Energy Inc.)
- (no filing in the citation store)
- PUMP (ProPetro Holding Corp.)
- (no filing in the citation store)
- RES (RPC, INC.)
- (no filing in the citation store)
- NESR (NATIONAL ENERGY SERVICES REUNITED CORP.)
- (no filing in the citation store)
Well Construction (reported)
- BKR (Baker Hughes Co)
- (no filing in the citation store)
- HAL (HALLIBURTON COMPANY)
- (no filing in the citation store)
- NOV (NOV INC.)
- (no filing in the citation store)
- RES (RPC, INC.)
- (no filing in the citation store)
- WFRD (Weatherford International plc)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
Q1 2026 earnings release, April 24, 2026 · Q1 2026 earnings release and Q2 guidance commentary, April 2026 · SLB Q2 2026 earnings announcement, June 2026 · Q1 2026 earnings commentary, April 24, 2026 · Q1 2026 earnings commentary, April 2026 · analyst coverage summary, July 2026