12 Most Undervalued Large Cap Stocks to Buy Now

7. Schlumberger (NYSE:SLB)

Forward Price-to-Earnings Ratio as of March 4: 11.89

Number of Hedge Fund Holders: 80

Schlumberger (NYSE:SLB) is a global technology provider for the energy industry. It offers digital, reservoir, well construction, and production systems. It delivers services spanning field development, hydrocarbon production, carbon management, and well optimization. This includes subsurface evaluation, drilling, completion, and production enhancement.

The company’s Digital and Integration segment’s revenue reached $1.2 billion in Q4 2024, which was a 6% sequential increase. This segment offers digital energy solutions and integrates them into operations. Its growth was driven by a 10% rise in Digital revenue. For the full year 2024, Digital revenue hit $2.44 billion, which was a 20% increase. Customers are adopting cloud computing, AI, and digital operations to improve efficiency, which is contributing to the segment’s success.

Schlumberger (NYSE:SLB) expects Digital revenue to continue its growth trajectory in 2025. This will be supported by ongoing demand for digital operations, data, and AI solutions. While revenue from APS (Asset Performance Solutions) is expected to decline due to the Palliser divestiture (sale of its interest in the Palliser APS project in Canada), the performance of the Digital business will drive the company’s overall growth.

Ariel Focus Fund initiated a position in the company, viewing its current market weakness as a buying opportunity based on its strong fundamentals and expected medium-term demand growth. It stated the following regarding Schlumberger (NYSE:SLB) in its Q4 2024 investor letter:

“Also in the quarter, we initiated a position in Schlumberger Limited (NYSE:SLB), the largest oilfield services company in the world by revenue. SLB provides equipment, services, and digital tools to help oil and gas producers operate more efficiently, including reservoir characterization, rig and well construction and production enhancement. We believe the company’s scale and technical expertise serves as a key differentiator. Weak near-term demand, an oil glut, falling commodity prices and concerns about future spending amid a global shift to renewable energies presented an attractive entry point. We believe there are tailwinds supporting rising demand over the medium-term, as national oil companies invest in long-cycle projects to grow capacity and address the natural decline of production. Additionally, we expect SLB will continue to evolve their capabilities to help clients with rising energy needs going forward.”