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Now (DNOW)
NYSE:DNOW
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Now
(NYSE:DNOW)72Outperform
Now (DNOW) vs. S&P 500 (SPY)
Market Cap
$1.60B
Dividend YieldN/A
Average Volume (3M)1.11M
Price to Earnings (P/E)20.2
Beta (1Y)1.13
Revenue Growth2.24%
EPS Growth-66.96%
CountryUS
Employees2,575
SectorEnergy
Sector Strength57
IndustryFossil Fuels
Share Statistics
EPS (TTM)0.74
Shares Outstanding105,687,410
10 Day Avg. Volume1,054,768
30 Day Avg. Volume1,105,151
Financial Highlights & Ratios
PEG Ratio0.12
Price to Book (P/B)N/A
Price to Sales (P/S)0.67
Price to Cash Flow (P/CF)3.30
P/FCF Ratio3.30
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$19.50Price Target Upside27.37% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering2
Now Business Overview & Revenue Model
Company DescriptionNOW Inc. (DNOW) is a global distributor of energy and industrial products, services, and supply chain solutions. The company primarily serves the oil and gas industry, providing an extensive range of products, including maintenance, repair, and operating (MRO) supplies, pipe, valves, fittings, safety products, and tools. Headquartered in Houston, Texas, NOW Inc. operates through a network of locations in various countries, enabling it to meet the critical supply chain needs of its customers.
How the Company Makes MoneyNOW Inc. generates revenue through the sale of a broad range of energy and industrial products directly to companies in the oil and gas sector as well as other industries. The company's revenue model is primarily based on the distribution and sale of products required for drilling, production, and maintenance operations. Key revenue streams include the sale of pipe, valves, and fittings (PVF), maintenance, repair, and operating (MRO) supplies, and other related industrial products. Additionally, NOW Inc. partners with a variety of suppliers and manufacturers to offer a comprehensive inventory, ensuring timely delivery and availability of critical components to its clients. The company's extensive distribution network and value-added services, such as inventory management and technical support, also contribute significantly to its earnings.
Now Financial Statement Overview
Summary
DNOW demonstrates stable revenue growth and excellent cash flow management, though profitability has declined. The balance sheet shows low leverage and high equity, providing a solid foundation for growth. The main challenge is improving operational efficiency to boost net margins.Income Statement
The company's gross profit margin remained stable at approximately 22.5%. The net profit margin decreased to 3.4% from 10.6%, primarily due to a significant drop in net income. Revenue growth was modest at 2.2%. EBIT margin dropped to 4.8% from 6.0%, indicating reduced operational efficiency. The EBITDA margin also decreased to 4.8% from 7.1%. Overall, the income statement shows stable revenue but declining profitability.75
Positive
Balance Sheet
The company maintains a strong balance sheet with a low debt-to-equity ratio of 0.03, indicating minimal leverage risk. Return on Equity (ROE) decreased to 7.2% from 23.3%, reflecting lower profitability. The equity ratio improved to 69.6%, showcasing a strong equity base relative to assets. Overall, the balance sheet is solid with low leverage and high equity stability.82
Very Positive
Cash Flow
The company demonstrated strong cash flow with a significant increase in free cash flow to $289 million, up 69% from the previous year. The operating cash flow to net income ratio increased to 3.68, indicating robust cash generation relative to earnings. Free cash flow to net income ratio also improved to 3.57. The cash flow statement reflects excellent cash management and growth in free cash flow.88
Very Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 2.37B | 2.32B | 2.14B | 1.63B | 1.62B | Gross Profit |
| 535.00M | 535.00M | 506.00M | 357.00M | 292.00M | EBIT |
| 113.00M | 140.00M | 131.00M | 9.00M | 194.00M | EBITDA |
| 153.00M | 166.00M | 170.00M | 40.00M | -77.00M | Net Income Common Stockholders |
| 81.00M | 247.00M | 128.00M | 5.00M | -427.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 256.00M | 299.00M | 212.00M | 313.00M | 387.00M | Total Assets |
| 1.62B | 1.53B | 1.32B | 1.10B | 1.01B | Total Debt |
| 29.00M | 41.00M | 38.00M | 17.00M | 25.00M | Net Debt |
| -227.00M | -258.00M | -174.00M | -296.00M | -362.00M | Total Liabilities |
| 493.00M | 466.00M | 476.00M | 392.00M | 309.00M | Stockholders Equity |
| 1.13B | 1.06B | 842.00M | 712.00M | 699.00M |
| Cash Flow | Free Cash Flow | |||
| 289.00M | 171.00M | -27.00M | 25.00M | 181.00M | Operating Cash Flow |
| 298.00M | 188.00M | -18.00M | 30.00M | 189.00M | Investing Cash Flow |
| -304.00M | -48.00M | -87.00M | -96.00M | 22.00M | Financing Cash Flow |
| -33.00M | -55.00M | -10.00M | -6.00M | -8.00M |
Now Technical Analysis
Neutral
15.31
Price Trends
14.58
Positive
14.12
Positive
13.73
Positive
Market Momentum
0.17
Positive
44.94
Neutral
14.18
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DNOW, the sentiment is Neutral. The current price of 15.31 is below the 20-day moving average (MA) of 15.82, above the 50-day MA of 14.58, and above the 200-day MA of 13.73, indicating a neutral trend. The MACD of 0.17 indicates Positive momentum. The RSI at 44.94 is Neutral, neither overbought nor oversold. The STOCH value of 14.18 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for DNOW.
Now Peers Comparison
Overall Rating
UnderperformOutperform
Sector (57)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $41.90B | 14.22 | 18.47% | 2.03% | 9.10% | 55.56% | |
77 Outperform | $11.17B | 13.88 | 27.06% | 0.75% | 16.23% | 1403.29% | |
72 Outperform | $53.62B | 12.69 | 21.59% | 2.81% | 9.58% | 6.53% | |
72 Outperform | $1.60B | 20.19 | 7.33% | ― | 2.24% | -66.96% | |
70 Outperform | $1.12B | 12.18 | 8.55% | 3.09% | -12.52% | -52.79% | |
57 Neutral | $8.34B | 5.35 | -5.98% | 7.29% | 0.20% | -69.45% | |
56 Neutral | $298.92M | ― | -1.62% | ― | -11.47% | -187.17% |
* Energy Sector Average
Performance Comparison
DNOW
Now
15.31
0.58
3.94%
BKR
Baker Hughes Company
42.89
12.99
43.44%
FTI
TechnipFMC
26.67
4.82
22.06%
OIS
Oil States International
4.74
-0.86
-15.36%
RES
RPC
5.24
-2.12
-28.80%
SLB
Schlumberger
41.37
-7.73
-15.74%
Now Earnings Call Summary
Earnings Call Date: Feb 13, 2025 | % Change Since: 8.27% | Next Earnings Date: May 1, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed view. While NOW Inc. showcased strong free cash flow generation, successful acquisitions, and a robust share repurchase program, challenges were noted in international and Canadian markets, along with expected declines in the upstream sector. Overall, the company remains optimistic about growth opportunities in 2025.Highlights
Strong Free Cash Flow Generation
NOW Inc. generated $289 million in free cash flow for the full year 2024, marking one of the best years since 2015, with a conversion rate of 165%.
Successful Acquisition Strategy
Completed the acquisition of Trojan, enhancing water management solutions and providing significant synergies with existing offerings.
Increased Share Repurchase Program
The board authorized a new $160 million share repurchase program, double the size of the previous one, reflecting confidence in the company's cash generation capabilities.
Revenue Growth in Energy Evolution Space
Revenues in the energy evolution space grew by more than 60%, from $30 million in 2023 to over $50 million in 2024.
Strong Digital Integration
Completed various digital customer integrations, improving efficiencies, reducing errors, and enhancing transaction speed.
Lowlights
Decline in International Revenue
International revenue for 2024 decreased by 17% or $50 million from 2023, a year with heavy project activity.
Revenue Decline in Canada
Canada revenue for 2024 fell by 10% or $29 million from 2023, impacted by foreign currency changes.
Challenges in Upstream Market
Faced expectations of a decline in upstream activities, with anticipated sales declines in fabrication by about $40 million in 2025.
Lower Gross Margins Compared to 2023
Full year 2024 gross margins were lower than 2023, at 22.5%, due to pricing deflation in steel products.
Company Guidance
During the NOW Inc. fourth quarter and full year 2024 earnings call, the company provided guidance indicating anticipated growth for 2025 despite projected declines in market activities. The guidance detailed expectations for revenue to be flat to up in the high single-digit percent range from 2024 levels, with EBITDA potentially approaching 8% of revenue. Key financial metrics from 2024 included $2.373 billion in total revenue, a 2% year-over-year increase, and an EBITDA of $176 million, or 7.4% of revenue. The company also highlighted its strong gross margin of 23.3% for the fourth quarter and an impressive $289 million in free cash flow for the full year. NOW Inc. emphasized its strategic focus on acquisitions, with 23 completed since 2014, and announced a new $160 million share repurchase program, doubling the size of its previous initiative. The company aims to leverage its strong balance sheet, which includes zero debt and a cash position of $256 million, to fund growth through both M&A and share buybacks, while maintaining a focus on operational efficiencies and cash flow generation.Now Corporate Events
Stock BuybackBusiness Operations and Strategy
DNOW Inc. Announces $160 Million Share Buyback Plan
Positive
Jan 24, 2025
On January 24, 2025, DNOW Inc. announced a new share repurchase program authorized by its Board of Directors, allowing the company to buy back up to $160 million of its common stock. This initiative, which is double the size of its previous $80 million program, reflects DNOW’s strategic focus on acquisition growth and organic investment, while aiming to deliver significant returns to shareholders and enhance its market positioning. The program provides flexibility in capital return and underscores the company’s commitment to disciplined capital allocation, although the timing and occurrence of share repurchases remain dependent on market conditions and other factors.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.