Schlumberger Vs. Halliburton: Which Oil & Gas Stock Is A Better Buy?

Profitability

SLB’s trailing 12-month revenue is 1.60 times HAL’s. SLB is also more profitable with a gross margin of 11.7% compared to HAL’s 7.8%.

Furthermore, SLB’s ROA and leveraged free cash flow of 2.5% and 14.6%, respectively, compare favorably with HAL’s 1% and 13.8%, respectively.

Valuation

In terms of trailing 12-month non-GAAP P/E, SLB is currently trading at 25.46x, 4.7% more expensive than HAL, which is currently trading at 24.32x. SLB is also more expensive in terms of trailing 12-month Price/Sales (1.14x versus 1.03x).

However, HAL’ forward non-GAAP PEG of 2.77x is 78.7% higher than SLB’s 1.55x. In terms of trailing 12-month Price/Cash flow, HAL’s 7.05x is slightly more expensive than SLB’s 6.98x.

POWR Ratings

HAL is rated “Buy” in our proprietary POWR Ratings system, while SLB is rated “Sell”. Here’s how the four components of overall POWR Rating are graded for both these stocks:

HAL has a “B” for Trade Grade and Peer Grade, “C” for Buy & Hold Grade, and “D” for Industry Rank. In the 60-stock Energy – Services industry, it is currently ranked #3.

SLB, in comparison, has a “D” for Trade Grade, Peer Grade, and Industry Rank, and “F” for Buy & Hold Grade. It is ranked #23 in the same industry.

The Winner

The steady recovery of the energy industry is reflected in SLB and HAL’s last reported financial results and consensus estimates. While neither of the companies are expected to reach their pre-pandemic levels soon, both SLB and HAL are trading above their 50-day and 200-day moving averages, indicating an uptrend in the stocks.

However, SLB is trading below its 20-day exponential moving average of $21.81, which reflects a slower recovery compared to HAL, which is trading above its 20-day EMA of $18.77. Thus, in addition to the fundamentals discussed here, HAL is expected to recover from the pandemic driven lows at a faster pace than SLB, as per technical indicators, making it a better buy here.

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