Seven year Kuwait contract puts SLB’s technology footprint in focus

SLB (SLB) has secured a seven year contract with Kuwait Oil Company under the Ahmadi Innovation Valley initiative, putting the stock’s global technology role and long term project exposure in sharper focus for investors.

SLB’s recent seven year Kuwait Oil Company contract arrives after a period where the stock has seen a 16.68% decline in its 30 day share price return and a 9.20% decline over 90 days, even as its year to date share price return is 13.73% and its 1 year total shareholder return sits at 34.39%. This points to longer term gains alongside fading shorter term momentum.

If this kind of long term project pipeline catches your attention, it may be worth broadening your search with our screener for 35 power grid technology and infrastructure stocks

SLB is securing long dated contracts and expanding its footprint, yet the stock has pulled back recently and trades at a discount to analyst targets. Is this a quality business that is currently offered at a reasonable price?

Most Popular Narrative: 25.5% Undervalued

Based on the most followed narrative, SLB’s fair value of $61.39 sits well above the latest close of $45.72, which puts this new Kuwait contract into an interesting pricing context for investors.

Persistent industry demand for digital transformation, automation, and efficiency driven by operator focus on production optimization and recovery has led to strong adoption and double digit year over year growth in SLB's digital business (notably the DELFI platform). This bolsters net margins and creates a more stable, higher margin recurring revenue stream.

Want to see what is baked into that fair value gap? The narrative leans heavily on steady revenue expansion, fatter margins and a future earnings multiple that assumes SLB can keep scaling its higher margin digital and production focused work. Curious which specific growth and profitability paths have to line up for that number to hold?

Result: Fair Value of $61.39 (UNDERVALUED)

However, the SLB narrative still faces clear risks, including potential declines in global upstream spending and uncertainty around integrating ChampionX without putting pressure on margins or growth.

Next Steps

Given the mix of optimism and concern around SLB, it makes sense to move quickly, review the underlying data, and weigh both sides using the 4 key rewards and 2 important warning signs.

Looking for more investment ideas beyond SLB?

If SLB has sharpened your interest in long term opportunities, do not stop here. The next strong addition to your portfolio could be just a few clicks away.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.