Schlumberger Limited (NYSE:SLB) is set to release FQ4'2013 earnings before the opening bell on Friday, January 17. Schlumberger is a global drilling and energy corporation and its earnings report on Friday could be an indicator of how well stocks in the industry will perform this quarter. So far in the January earnings season we have already seen big winners including Bank of America (NYSE:BAC) and losers like Citigroup (NYSE:C).
The current Wall Street consensus expectation is for SLB to report $1.33 EPS and $11.991B revenue while the current Estimize.com consensus from 9 Buy Side and Independent contributing analysts is 1.35c EPS and $12.017B revenue.
Schlumberger has met or exceeded the Wall Street profit consensus 6 times over the past 2 years. In the previous 5 quarters where there was disagreement, the Estimize.com consensus was more accurate than Wall Street 4 times.
By tapping into a wider range of contributors including hedge-fund analysts, asset managers, independent research shops, students, and non professional investors Estimize has created a data set that is up to 69.5% more accurate than Wall Street, but more importantly it does a better job of representing the market's actual expectations.
The magnitude of the difference between the Wall Street and Estimize consensus numbers often identifies opportunities to take advantage of expectations that may not have been priced into the market. In this case we are seeing an average differential between the groups.
The distribution of estimates published by analysts on Estimize range from $1.33 to $1.36 EPS and $11.980B to $12.071B in revenues. This quarter we're seeing an average distribution of estimates on profit compared to previous quarters. The size of the distribution of estimates relative to previous quarters often signals whether or not the market is confident that it has priced in the expected earnings already. A wider distribution signaling the potential for greater volatility post earnings, a smaller vice versa.
Over the past 4 months Wall Street has decreased its EPS forecast from $1.36 to $1.33 while the Estimize.com consensus has remained flat at $1.35. Wall Street revenue expectations have dropped from $12.230B to $11.991B while the Estimize consensus declined from $12.025B to $12.017B.
The analyst with the highest estimate confidence rating this quarter is azhong who projects $1.35 EPS and $12.000B in revenue. In the Winter 2014 season, azhong is currently ranked as the 31st best analyst and is ranked 103rd overall among over 3,400 contributing analysts. Estimate confidence ratings are calculated through algorithms developed by deep quantitative research which looks at correlations between analyst track records and tendencies as they relate to future accuracy. In this case the highest rated analyst is expecting SLB to beat Wall Street on profit and fall between the two groups' consensuses on revenue.