Stock Analysis on Net

Schlumberger Ltd. (NYSE:SLB)

$24.99

Economic Value Added (EVA)

Microsoft Excel

EVA is registered trademark of Stern Stewart.

Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.

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Economic Profit

Schlumberger Ltd., economic profit calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Net operating profit after taxes (NOPAT)1
Cost of capital2
Invested capital3
 
Economic profit4

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 NOPAT. See details »

2 Cost of capital. See details »

3 Invested capital. See details »

4 2024 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= × =


Net Operating Profit After Taxes (NOPAT)
The net operating profit after taxes exhibited a significant turnaround from a substantial loss of US$11,275 million at the end of 2020 to positive figures in subsequent years. It increased to US$2,298 million in 2021, then rose steadily each year to US$4,815 million by the end of 2024. This trend indicates a strong recovery and consistent improvement in operating profitability over the period.
Cost of Capital
The cost of capital showed an upward trend from 12.95% in 2020 to a peak of 17.55% in 2022, followed by a slight decline to 16.82% in 2024. The initial increase suggests growing expense or risk perceived in financing the company's operations, which then marginally eased but remained elevated compared to the starting point.
Invested Capital
Invested capital experienced moderate fluctuations over the years. It slightly decreased from US$33,428 million in 2020 to US$32,896 million in 2021, then increased gradually, reaching US$39,383 million by the end of 2024. This progression indicates ongoing investments or asset base expansion after an initial contraction.
Economic Profit
Economic profit remained negative throughout the period, although the magnitude of the loss decreased significantly. Starting at a deficit of US$15,603 million in 2020, the loss narrowed to US$1,811 million by 2024. Despite improvements, the company did not achieve positive economic profit, suggesting that returns did not fully exceed the cost of capital during these years.

Net Operating Profit after Taxes (NOPAT)

Schlumberger Ltd., NOPAT calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Net income (loss) attributable to SLB
Deferred income tax expense (benefit)1
Increase (decrease) in allowance for doubtful accounts2
Increase (decrease) in equity equivalents3
Interest expense
Interest expense, operating lease liability4
Adjusted interest expense
Tax benefit of interest expense5
Adjusted interest expense, after taxes6
(Gain) loss on marketable securities
Interest income
Investment income, before taxes
Tax expense (benefit) of investment income7
Investment income, after taxes8
Net income (loss) attributable to noncontrolling interest
Net operating profit after taxes (NOPAT)

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 Elimination of deferred tax expense. See details »

2 Addition of increase (decrease) in allowance for doubtful accounts.

3 Addition of increase (decrease) in equity equivalents to net income (loss) attributable to SLB.

4 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =

5 2024 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =

6 Addition of after taxes interest expense to net income (loss) attributable to SLB.

7 2024 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =

8 Elimination of after taxes investment income.


Net income (loss) attributable to SLB
The net income attributable to SLB demonstrates a significant recovery trend over the observed period. In 2020, the company reported a substantial loss of approximately 10.5 billion US dollars. However, this was followed by a marked turnaround in 2021, reaching a positive net income of about 1.9 billion US dollars. The subsequent years show consistent growth, with net income increasing to 3.4 billion in 2022, 4.2 billion in 2023, and 4.5 billion US dollars in 2024. This progression indicates improving profitability and effective management responses to prior challenges.
Net operating profit after taxes (NOPAT)
NOPAT mirrors the trends observed in net income, starting from a significant negative value of around 11.3 billion US dollars in 2020. Following this, there is a steady and considerable improvement, with the figure rising to approximately 2.3 billion in 2021. The upward trajectory continues through 2022 to 2024, with NOPAT reaching 3.8 billion, then 4.6 billion, and finally stabilizing near 4.8 billion US dollars. This consistent increase highlights enhanced operational efficiency and profitability after tax expenses.
Overall Observations
Both key profitability metrics exhibit a substantial recovery from profound losses in 2020 to solid gains by 2024. The steady annual increases suggest that the company implemented effective strategies to reverse losses and improve financial health. The close alignment between net income and NOPAT trends indicates sound operational performance and improved tax management over the period analyzed.

Cash Operating Taxes

Schlumberger Ltd., cash operating taxes calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Tax expense (benefit)
Less: Deferred income tax expense (benefit)
Add: Tax savings from interest expense
Less: Tax imposed on investment income
Cash operating taxes

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).


The financial data indicates a consistent and rising trend in the tax expense (benefit) over the observed periods. Starting from a negative tax expense (benefit) of -812 million US dollars in 2020, the figure turned positive and increased substantially to 446 million in 2021. Thereafter, the tax expense showed a steady upward trajectory, reaching 779 million in 2022, 1007 million in 2023, and further climbing to 1093 million in 2024. This progression suggests an improvement in profitability or taxable income over the years, as tax expenses tend to correlate positively with earnings before tax.

In parallel, cash operating taxes also exhibited a similar expanding trend. Beginning at 546 million US dollars in 2020, cash operating taxes rose moderately to 579 million in 2021, followed by a significant increase to 905 million in 2022. This growth continued in 2023 with cash operating taxes amounting to 1070 million, and further to 1211 million in 2024. The consistent increase in cash operating taxes aligns with the upward movement in reported tax expense, indicating sustained growth in taxable cash flows and possibly improved operational performance.

The simultaneous increase observed in both tax expense and cash operating taxes over the five-year period reflects an overall positive financial trajectory. The data implies enhanced earnings capacity, higher taxable income, and an expanding tax liability footprint, which typically signals operational growth and improving economic conditions for the company.


Invested Capital

Schlumberger Ltd., invested capital calculation (financing approach)

US$ in millions

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Short-term borrowings and current portion of long-term debt
Long-term debt, excluding current portion
Operating lease liability1
Total reported debt & leases
Total SLB stockholders’ equity
Net deferred tax (assets) liabilities2
Allowance for doubtful accounts3
Equity equivalents4
Accumulated other comprehensive (income) loss, net of tax5
Noncontrolling interests
Adjusted total SLB stockholders’ equity
Marketable securities6
Invested capital

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 Addition of capitalized operating leases.

2 Elimination of deferred taxes from assets and liabilities. See details »

3 Addition of allowance for doubtful accounts receivable.

4 Addition of equity equivalents to total SLB stockholders’ equity.

5 Removal of accumulated other comprehensive income.

6 Subtraction of marketable securities.


Total reported debt & leases
There is a consistent downward trend in total reported debt and leases from 2020 through 2023, decreasing from 17,897 million USD in 2020 to 12,775 million USD in 2023. In 2024, the debt level stabilized, showing a slight increase to 12,816 million USD. Overall, this indicates a reduction in leverage over the five-year period, with a significant decrease in the first three years followed by stabilization.
Total SLB stockholders’ equity
Stockholders’ equity exhibits a steady and significant upward trend throughout the entire period. It grew from 12,071 million USD in 2020 to 21,130 million USD in 2024, showing sustained capital accumulation and increased net asset value. This growth suggests strengthening financial stability and potentially successful retention of earnings or capital infusions.
Invested capital
Invested capital showed a slight decline from 33,428 million USD in 2020 to 32,896 million USD in 2021, followed by a modest increase to 33,931 million USD in 2022. From 2022 onward, the invested capital rose noticeably, reaching 39,383 million USD in 2024. This trend implies increasing investment activities or asset base expansion in the latter years, reflecting growth initiatives or capital expenditures.

Cost of Capital

Schlumberger Ltd., cost of capital calculations

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Debt3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (reporting date: 2024-12-31).

1 US$ in millions

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Debt3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (reporting date: 2023-12-31).

1 US$ in millions

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Debt3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (reporting date: 2022-12-31).

1 US$ in millions

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Debt3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (reporting date: 2021-12-31).

1 US$ in millions

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Debt3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (reporting date: 2020-12-31).

1 US$ in millions

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »


Economic Spread Ratio

Schlumberger Ltd., economic spread ratio calculation

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Selected Financial Data (US$ in millions)
Economic profit1
Invested capital2
Performance Ratio
Economic spread ratio3

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 Economic profit. See details »

2 Invested capital. See details »

3 2024 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =


Economic Profit
The economic profit has demonstrated a consistent improvement over the five-year period, starting from a significant negative value of -15,603 million US dollars in 2020 and decreasing in magnitude to -1,811 million US dollars by 2024. Despite remaining negative throughout, the rate of decline in losses suggests improving profitability or efficiency in capital utilization.
Invested Capital
Invested capital has shown a general upward trend, rising from 33,428 million US dollars in 2020 to 39,383 million US dollars in 2024. The investment growth indicates ongoing capital deployment, with the most notable increase occurring between 2022 and 2023, reflecting possible expansion or reinvestment activities in the business.
Economic Spread Ratio
The economic spread ratio, which reflects the profitability of the invested capital, has improved steadily from -46.68% in 2020 to -4.6% in 2024. Although the ratio remains negative, the narrowing gap indicates that returns are moving closer to breaking even, suggesting enhanced operational performance or better cost management over time.

Economic Profit Margin

Schlumberger Ltd., economic profit margin calculation

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Selected Financial Data (US$ in millions)
Economic profit1
Revenue
Performance Ratio
Economic profit margin2

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 Economic profit. See details »

2 2024 Calculation
Economic profit margin = 100 × Economic profit ÷ Revenue
= 100 × ÷ =


Revenue
Revenue has shown a consistent upward trend over the analyzed periods, increasing from US$23,601 million in 2020 to US$36,289 million in 2024. This represents a notable growth trajectory, indicating an expanding operational scale or improved market conditions over the five years.
Economic Profit
Economic profit, while negative throughout the period, exhibits a marked improvement. The loss narrowed significantly from -US$15,603 million in 2020 to -US$1,811 million in 2024. This improvement suggests better cost management, enhanced profitability, or both, despite the ongoing negative figures.
Economic Profit Margin
The economic profit margin, expressed as a percentage, aligns with the trend in economic profit. Starting at a deeply negative -66.11% in 2020, it improved steadily to -4.99% by 2024. This consistent reduction in margin losses reflects a positive progression towards achieving economic profitability, although profitability has not yet been realized.
Overall Insights
The data portrays a company experiencing significant revenue growth accompanied by reductions in economic losses and improvements in economic profit margins. Despite persistent negative economic profit, the improving metrics indicate a positive trajectory in overall financial health and operational efficiency. Attention to continued improvement could potentially lead to a turnaround into positive economic profit in subsequent years.