SLB Surges 7% on Growth Moves Is Share Price Lagging Its True Value in 2025?

If you are wondering whether now is the time to buy, hold, or move on from SLB, you are in good company. This stock has delivered a ride full of twists lately, leaving investors with more than a few questions. In just the last week, SLB has posted a strong 7.0% climb, pushing the share price to $35.86, even as its year-to-date return remains in the red at -6.6%. Over longer periods, the stock paints an interesting picture. While it is still down 8.6% over the past year and 25.3% over three years, its five-year gain of 152.8% shows there is plenty of potential if you know where to spot it.

Much of the recent optimism comes as investors digest strategic moves by SLB to streamline its portfolio and position itself for growth in international energy markets. Talks on new sustainability initiatives and a shift toward technology-driven solutions have brought a fresh sense of opportunity, casting SLB’s prospects in a new light. These factors have also slightly changed risk perceptions among analysts and retail investors alike, which is already reflected in the recent rebound.

But numbers do not lie. According to a comprehensive valuation check, SLB clocks in with an impressive value score of 6, meaning the company appears undervalued by every measure our screeners use. In the next section, we will break down those key valuation methods and, perhaps even more importantly, introduce a smarter way to use value scoring when making investment decisions.

Why SLB is lagging behind its peers

Approach 1: SLB Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model evaluates a company's worth by projecting its future cash flows and discounting them back to today's value. This offers an estimate of intrinsic value based on expected financial performance over time.

For SLB, the most recent Free Cash Flow is $3.27 billion, serving as the foundation of this analysis. Analysts forecast significant growth, with Free Cash Flow expected to reach $5.99 billion by 2029. After the analyst-driven period, further increases in cash flow are extrapolated by Simply Wall St. The 2035 projection stands at $7.84 billion. All these forecasts are converted to today's dollars using the DCF approach to ensure a realistic present-day value.

This DCF model estimates SLB's fair value at $81.24 per share. With the current share price at $35.86, the analysis suggests the stock is trading at a 55.9% discount to its intrinsic value, indicating substantial undervaluation.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for SLB.

Our Discounted Cash Flow (DCF) analysis suggests SLB is undervalued by 55.9%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: SLB Price vs Earnings

The Price-to-Earnings (PE) ratio is a go-to measure for valuing profitable companies like SLB because it reveals how much investors are willing to pay for $1 of current earnings. This makes it especially useful when cash flows and profits are stable and transparent, as is the case with SLB.

It’s important to remember that a “fair” PE ratio for any stock depends heavily on growth expectations and risk. High-growth companies or those with lower perceived risks tend to justify higher PE ratios, while slower-growing or riskier companies often trade at lower valuations.

Currently, SLB trades at a PE ratio of 14.7x. For context, the Energy Services industry averages about 16.3x, while direct peers cluster around 16.3x as well. This means SLB is priced slightly below its peer group and the broader sector.

Simply Wall St’s Fair Ratio tool goes a step further than these basic benchmarks by adjusting for factors like SLB’s projected earnings growth, profit margins, market cap, and the unique risks it faces. In SLB’s case, this proprietary model calculates a Fair Ratio of 18.9x, reflecting what a well-informed investor might expect in today’s market given all relevant company attributes.

Comparing the Fair Ratio (18.9x) with SLB’s actual PE (14.7x) suggests the shares are trading at a meaningful discount, offering better value than both the industry and peer averages. In short, this analysis highlights further upside potential for SLB at its current valuation.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your SLB Narrative

Earlier we mentioned an even better way to understand valuation, so let's introduce you to Narratives. A Narrative lets you tell the story behind what you think a company like SLB is worth by linking your view of its business prospects, future revenue and earnings, and profit margins into a clear financial forecast and unique fair value estimate.

Rather than just relying on static models, Narratives empower you to express your perspective—whether optimistic or cautious—by adjusting expectations and seeing how your story compares to other investors or expert consensus. Available on Simply Wall St’s Community page, Narratives make this process easy to access and use, no matter your background.

Because Narratives directly connect your outlook with a financial forecast, they help you decide when to buy or sell by comparing your fair value to the current share price. Narratives also stay current and automatically update when important news or quarterly results arrive to reflect the latest information.

For example, some investors see strong digital growth and set SLB’s fair value at $63.00 based on bullish revenue forecasts, while others believe risks and industry headwinds justify a more conservative $36.00 estimate. With Narratives, you can instantly see the range of perspectives and decide what fits your conviction best.

Do you think there's more to the story for SLB? Create your own Narrative to let the Community know!

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com