Schlumberger 1 Of 3 Interesting Plays To Reflect On

Jun. 5.12 | About: Schlumberger Limited (SLB)

In the learning to fish series, investors are provided with suggested guidelines for choosing a potential candidate and one candidate is selected as our play of choice. We provide reasons for this choice and in doing so hope to impart some understanding to those who are new to the field of dividend investing. The suggested guidelines can be accessed here "Our suggested guidelines when searching for new investment ideas." These are not absolute rules; they are just suggestions and there are always exceptions to the rule. The goal is to try to satisfy as many of them as possible. Schlumberger Ltd (NYSE:SLB) is an example of play that fulfills all the suggested requirements.

Reasons to be bullish on Schlumberger Ltd :

  1. A five-year sales growth rate of 11.40%
  2. A good long-term debt to equity ratio of 0.26
  3. A five-year dividend growth rate of 11.77%
  4. A great interest rate coverage ratio of 23
  5. A five-year ROE average of 24%
  6. A good current and quick ratio of 1.73 and 1.5 respectively
  7. A great retention ratio of 72
  8. A quarterly revenue growth rate of 21.7%
  9. A good quarterly revenue growth rate of 37.8%
  10. A five-year cash flow average of 5.34
  11. Cash flow per share increased from $4.86 in 2009 to $6.15 in 2011
  12. Net income increased from $3.13 billion in 2009 to $4.99 billion in 2011
  13. Sales increased from $22 billion in 2009 to $39.5 billion in 2011
  14. Annual EPS before NRI increased from $2.78 in 2009 to $3.66 in 2011
  15. $100K invested for 10 years would have grown roughly to $323K

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Company: Schlumberger Lt

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Basic overview

  • Percentage Held by Insiders = 0.21
  • Levered free cash flow = $1.09 billion
  • Relative Strength 52 weeks = 41
  • Cash Flow 5-year Average = 5.34
  • Dividend Yield 5-Year Average = 1.25

Growth

  • Net Income ($mil) 12/2011 = 4997
  • Net Income ($mil) 12/2010 = 4267
  • Net Income ($mil) 12/2009 = 3134
  • Net Income Reported Quarterly ($mil) = 1301
  • EBITDA ($mil) 12/2011 = 9917
  • EBITDA ($mil) 12/2010 = 8122
  • EBITDA ($mil) 12/2009 = 6631
  • Cash Flow ($/share) 12/2011 = 6.15
  • Cash Flow ($/share) 12/2010 = 4.66
  • Cash Flow ($/share) 12/2009 = 4.86
  • Sales ($mil) 12/2011 = 39540
  • Sales ($mil) 12/2010 = 27447
  • Sales ($mil) 12/2009 = 22702
  • Annual EPS before NRI 12/2009 = 2.78
  • Annual EPS before NRI 12/2010 = 2.86
  • Annual EPS before NRI 12/2011 = 3.66

Dividend history

  • Dividend Yield = 1.8
  • Dividend Yield 5 Year Average 12/2011 = 1.25
  • Dividend 5 year Growth = 11.77

Dividend sustainability

  • Payout Ratio 09/2011 = 0.28
  • Payout Ratio 5 Year Average 12/2011 = 0.25

Performance

  • Next 3-5 Year Estimate EPS Growth rate = 13
  • 5 Year History EPS Growth 12/2011 = -6.79
  • ROE 5 Year Average 12/2011 = 24.42
  • Return on Investment 12/2011 = 13.37
  • Current Ratio 12/2011 = 1.97
  • Current Ratio 5 Year Average = 1.73
  • Quick Ratio = 1.5
  • Cash Ratio = 0.6
  • Interest Coverage = 23

Company: Randgold Resources (NASDAQ:GOLD)

Basic Key ratios

  • Relative Strength 52 weeks = 59
  • Dividend 5-year Growth = 23
  • Cash Flow 5-year Average = 1.23
  • Dividend Yield 5-Year Average = 0.21

Growth

  • Net Income ($mil) 12/2011 = 433
  • Net Income ($mil) 12/2010 = 121
  • Net Income ($mil) 12/2009 = 84
  • EBITDA ($mil) 12/2011 = 485
  • EBITDA ($mil) 12/2010 = 145
  • EBITDA ($mil) 12/2009 = 134
  • Cash Flow ($/share) 12/2011 = 4.19
  • Cash Flow ($/share) 12/2010 = 1.33
  • Cash Flow ($/share) 12/2009 = 1.25
  • Sales ($mil) 12/2011 = 1127
  • Sales ($mil) 12/2010 = 485
  • Sales ($mil) 12/2009 = 433
  • Annual EPS before NRI 12/2007 = 0.6
  • Annual EPS before NRI 12/2008 = 0.54
  • Annual EPS before NRI 12/2009 = 0.84
  • Annual EPS before NRI 12/2010 = 1.13
  • Annual EPS before NRI 12/2011 = 4.27

Dividend history

  • Dividend Yield = 0.4
  • Dividend Yield 5 Year Average = 0.21
  • Dividend 5 year Growth = 23.33

Dividend sustainability

  • Payout Ratio 09/2011 = 0.04
  • Payout Ratio 5 Year Average 12/2011 = 0.12

Performance

  • Next 3-5 Year Estimate EPS Growth rate = 9.14
  • 5 Year History EPS Growth 12/2011 = 45.39
  • ROE 5 Year Average 12/2011 = 25.41
  • Return on Investment 12/2011 = 19.86
  • Current Ratio 12/2011 = 5.47
  • Current Ratio 5 Year Average = 4.99
  • Quick Ratio = 3.52
  • Cash Ratio = 2.79
  • Interest Coverage Quarterly = N/A

Company: Anadarko Petrol (NYSE:APC)

Growth

  • Net Income ($mil) 12/2011 = -2649
  • Net Income ($mil) 12/2010 = 761
  • Net Income ($mil) 12/2009 = -135
  • EBITDA ($mil) 12/2011 = 1245
  • EBITDA ($mil) 12/2010 = 6210
  • EBITDA ($mil) 12/2009 = 4126
  • Cash Flow ($/share) 12/2011 = 11.07
  • Cash Flow ($/share) 12/2010 = 9.32
  • Cash Flow ($/share) 12/2009 = 6.25
  • Sales ($mil) 12/2011 = 13967
  • Sales ($mil) 12/2010 = 10984
  • Sales ($mil) 12/2009 = 9000
  • Annual EPS before NRI 12/2007 = 8.34
  • Annual EPS before NRI 12/2008 = 6.92
  • Annual EPS before NRI 12/2009 = -0.96
  • Annual EPS before NRI 12/2010 = 1.81
  • Annual EPS before NRI 12/2011 = 3.38

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Dividend history

  • Dividend Yield = 0.6
  • Dividend Yield 5 Year Average 12/2011 = 0.63

Dividend sustainability

  • Payout Ratio 06/2011 = 0.11
  • Payout Ratio 5 Year Average 12/2011 = 0.2
  • Change in Payout Ratio = -0.1

Performance

  • Next 3-5 Year Estimate EPS Growth rate = 27.15
  • EPS Growth Quarterly(1)/Q(-3) = -126.03
  • 5 Year History EPS Growth 12/2011 = N/A
  • ROE 5 Year Average 12/2011 = 6.93
  • Current Ratio 06/2011 = 1.42
  • Current Ratio 5 Year Average = 1.25
  • Quick Ratio = 1.42
  • Cash Ratio = 0.75
  • Interest Coverage Quarterly = N/A

Conclusion

Long-term investors can use strong pullbacks to slowly start deploying money into long-term investments. A great way to get into a stock at a price of your choosing is to sell puts at strikes you would not mind owning the stock at.

Disclaimer

This list of stocks is meant to serve as a starting point. Please do not treat this as a buying list. It is imperative that you do your due diligence and then determine if any of the above plays meet with your risk tolerance levels. The Latin maxim caveat emptor applies - let the buyer beware.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Additional disclosure: EPS and Price Vs industry charts obtained from zacks.com. A major portion of the historical data used in this article was obtained from zacks.com.