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    SLB (SLB): Valuation Check After Securing Major Five-Year Aramco Unconventional Gas Contract

    Simply Wall St·12/25/2025 04:40:44
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    SLB (SLB) just landed a five year contract with Aramco to deliver advanced stimulation, well intervention, frac automation, and digital solutions across Saudi Arabia’s unconventional gas fields, deepening its role in the Kingdom’s gas expansion plans.

    See our latest analysis for SLB.

    The Aramco win caps a busy stretch for SLB, coming shortly after its digital collaboration with Shell and an ESOP related share offering. It seems to be nudging sentiment back onside, even though the 1 year total shareholder return of 3.82 percent still trails a punchy 5 year total shareholder return of 93.19 percent that reflects the longer term compounding story more than the recent 1 month share price return of 6.33 percent.

    If this kind of contract driven momentum has your attention, it could be a good moment to scan other energy names through aerospace and defense stocks as potential next ideas.

    With earnings growth slowing but a sizeable Aramco contract and a roughly 21 percent gap to consensus targets, is SLB quietly undervalued here, or is the market already baking in the next leg of growth?

    Most Popular Narrative Narrative: 16.2% Undervalued

    With SLB last closing at $37.97 against a narrative fair value near the mid 40 dollar range, the spread hinges on a specific earnings and margin roadmap.

    The integration of ChampionX expands SLB's capabilities in production optimization, chemicals, and digital production technology, unlocking new revenue synergies through cross-selling and international expansion, while also driving significant cost synergies ($400 million targeted). All of these factors are expected to increase EBITDA margins and earnings per share, notably in 2026 and beyond.

    Read the complete narrative.

    Curious how modest top line growth, rising margins, and shrinking share count can still justify a higher future earnings multiple than the sector? The playbook behind that gap is surprisingly aggressive and tightly calibrated around a single profit trajectory the narrative thinks SLB can hit.

    Result: Fair Value of $45.31 (UNDERVALUED)

    Have a read of the narrative in full and understand what's behind the forecasts.

    However, this hinges on smooth ChampionX integration and stable upstream spending. Any misstep or macro wobble could quickly challenge the optimistic margin and growth path.

    Find out about the key risks to this SLB narrative.

    Build Your Own SLB Narrative

    If you see the story differently or want to stress test your own assumptions using the same tools and data, you can spin up a custom narrative in minutes: Do it your way.

    A great starting point for your SLB research is our analysis highlighting 4 key rewards and 2 important warning signs that could impact your investment decision.

    Ready for your next investing edge?

    Do not stop at one compelling story. Use the Simply Wall St Screener to uncover fresh opportunities that match your strategy before other investors move first.

    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.