I was on CNBC yesterday, discussing our top pick from our research on the impact of the energy sector from the Iran war. SLB is the world's largest oilfield services provider. Over the past two weeks, the conflict in Iran sent crude prices briefly surging toward $120 per barrel, yet SLB's stock fell nearly 10% during the same period. That divergence has created what appears to be a rare valuation disconnect. The global leader in oilfield services trading as if energy demand were collapsing, despite one of the most volatile oil supply environments in decades. In reality, geopolitical disruptions tend to benefit companies like SLB over time. When global oil prices rise while supply becomes uncertain, producers typically respond by accelerating offshore development and long-cycle projects exactly the areas where SLB dominates. Trade timing & outlook SLB recently pulled back toward the $45 support level, which previously acted as resistance during the stock's breakout earlier this year. The stock successfully bounced off the $45 level, suggesting buyers are stepping in following the recent sell-off. Upside potential: If SLB stabilizes above support, the stock could recover towards $52, where it traded prior to the recent market turbulence. Technically, the recent pullback appears more consistent with macro-driven selling pressure than a deterioration in company fundamentals. Fundamentals Despite its dominant position in the oilfield services industry, SLB currently trades at a meaningful discount to its peers. Forward P/E: ~16x vs. Industry ~19.6x Expected revenue growth: ~4.5% vs. Industry ~5.3% Expected EPS growth: ~9.3% vs. Industry ~19% Net margins: ~9.5% vs. Industry ~5.1% While growth expectations are modest relative to some peers, SLB's profitability remains significantly higher than the industry average, reflecting its technology leadership and global footprint. The company also generated more than $4 billion in free cash flow in 2025 and continues returning capital to shareholders through dividends and buybacks. Bullish thesis International oil projects are accelerating: SLB's business is weighted toward international markets and offshore developments. The company recently secured multi-year projects with Petrobras in Brazil and Mubadala in Indonesia and is ready for an entry to Venezuela. Technology and software expansion: The ChampionX acquisition adds production optimization software and digital infrastructure, which should expand margins and deepen integration with major energy producers. Uncertainty favors services companies: Geopolitical disruptions and potential supply disruptions across the Middle East tend to encourage global producers to invest in new supply sources. That translates into more drilling activity, offshore projects and greater demand for oilfield services, all of which directly benefit SLB. Options trade Given the elevated volatility across energy stocks, a conservative way to express a bullish view is through a cash-secured put strategy. I'm looking to sell the April 17, 2026 $47.50 Put for approximately $2.05. Maximum reward: $205 per contract (4.51% yield in 37 days) Maximum risk: $4,545 if shares were assigned Breakeven: $45.45 This approach allows you to collect premium while potentially acquiring SLB shares at a discount if the stock declines. View this Trade on OptionsPlay for Updated Prices Summary The recent selloff in SLB appears driven more by macro uncertainty and market positioning than by any deterioration in the company's fundamentals. With geopolitical tensions pushing energy markets into one of their most volatile periods since 2022, the world's largest oilfield services company may be one of the most overlooked beneficiaries. If oil supply disruptions lead to increased global drilling activity, SLB's scale, technology leadership and international exposure position it to capture a disproportionate share of that spending. DISCLOSURES: None. All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, or its parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL'S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
