Why Schlumberger Stock Slumped on Friday

A promise to continue returning billions of dollars to shareholders couldn't make up for a lackluster first quarter from Schlumberger (NYSE: SLB) on Friday. After the company unveiled those results, investors generally traded out of the stock and left it with a nearly 2% loss on the day. Meanwhile, the S&P 500 index landed in positive territory with a 0.6% increase.

Drops in headline fundamentals

Both revenue and profitability declined for Schlumberger on a year-over-year basis during the quarter. The former metric slid by 3% to $8.49 billion for the oilfield services company, while non-GAAP (adjusted) net income saw a 9% tumble to $988 million ($0.72 in per-share terms).

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Compounding the downward trajectory of those line items, neither quite met their consensus analyst estimate. Prognosticators covering Schlumberger were collectively projecting $8.64 billion for revenue, and adjusted net income of $0.74 per share.

In the earnings release, CEO Olivier Le Peuch described the quarter rather tactfully as "subdued."

"Higher activity in parts of the Middle East, North Africa, Argentina and offshore U.S., along with strong growth in our data center infrastructure solutions and digital businesses in North America, were more than offset by a sharper-than-expected slowdown in Mexico, a slow start to the year in Saudi Arabia and offshore Africa, and steep decline in Russia," he explained.

The $4 billion pledge

Schlumberger is a sprawling services company that operates across the globe. That can be a strength when the energy industry is generally humming along, but these days several hot conflicts are making it tough to earn a consistent buck. At least the company has some exposure to the North American market, where its revenue rose by an encouraging 8%.

Additionally, the company continues to commit to shareholder-pleasing measures. Its board approved a quarterly dividend of just under $0.29 per share, matching the previous payout. Zooming out, it pledged to spend more than 50% of its free cash flow on dividends and share buybacks; management said it will devote at least $4 billion to these activities in 2025.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.