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NOV (NOV)
NYSE:NOV
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NOV
(NYSE:NOV)76Outperform
Positive Factors
EBITDA Growth
Quality of capital equipment backlog, market share gains from higher-margin technologies and operational efficiencies to drive EBITDA growth.
Shareholder Returns
Management affirmed its commitment to distribute 50% of future FCF to shareholders through a combination of regular and supplemental dividends and opportunistic share buybacks.
Negative Factors
Global Drilling Slowdown
The global drilling slowdown has intensified, leading both offshore and land drillers to reduce capex, which is a clear headwind to NOV.
NOV (NOV) vs. S&P 500 (SPY)
Market Cap
$5.43B
Dividend Yield1.93%
Average Volume (3M)4.35M
Price to Earnings (P/E)8.9
Beta (1Y)0.78
Revenue Growth3.42%
EPS Growth-35.98%
CountryUS
Employees34,010
SectorEnergy
Sector Strength57
IndustryFossil Fuels
Share Statistics
EPS (TTM)1.61
Shares Outstanding380,819,820
10 Day Avg. Volume4,035,795
30 Day Avg. Volume4,354,659
Financial Highlights & Ratios
PEG Ratio0.05
Price to Book (P/B)N/A
Price to Sales (P/S)0.61
Price to Cash Flow (P/CF)2.30
P/FCF Ratio2.20
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$18.38Price Target Upside28.08% Upside
Rating ConsensusHold
Number of Analyst Covering15
NOV Business Overview & Revenue Model
Company DescriptionNOV Inc. (formerly National Oilwell Varco) is a leading global provider of equipment and technology for the oil and gas industry. Headquartered in Houston, Texas, the company operates in various sectors, including rig technologies, wellbore technologies, and completion and production solutions. NOV's core products and services include drilling equipment, downhole tools, and comprehensive support services, designed to enhance the efficiency and safety of oil and gas operations worldwide.
How the Company Makes MoneyNOV generates revenue through the design, manufacture, sale, and service of a wide range of products and technologies for the oil and gas industry. Key revenue streams include sales of advanced drilling equipment, downhole tools, and wellbore intervention technologies. The company also earns money through long-term service agreements, providing maintenance, technical support, and training to its customers. Additionally, NOV benefits from strategic partnerships and collaborations with major oil and gas companies, which help to secure large-scale contracts and expand its market reach. The company's earnings are significantly influenced by global oil and gas industry trends, including exploration and production activity levels and technological advancements.
NOV Financial Statement Overview
Summary
NOV demonstrates strong financial performance with notable improvements in profitability, operational efficiency, and cash generation. The company shows a strong balance sheet with low leverage and high equity ratios, indicating financial stability. However, the decline in net income in the TTM, despite growing revenues, and past fluctuations in cash flow warrant close monitoring. Overall, the financial outlook is positive, with potential risks needing attention.Income Statement
The income statement shows a positive trajectory with significant revenue and profit growth. The TTM revenue increased by 3.33% compared to the previous year. Gross profit margin is healthy at 24.14%, and the net profit margin improved from previous deficits to 7.16% in the TTM. EBIT and EBITDA margins also indicate strong operational performance, standing at 11.35% and 12.76%, respectively. However, the net income has decreased compared to the previous year, which could be a point of concern.78
Positive
Balance Sheet
The balance sheet reflects a stable financial structure with a debt-to-equity ratio of 0.37, indicating a low leverage level. Return on Equity (ROE) has improved to 9.88% in the TTM, suggesting efficient use of equity capital. The equity ratio is strong at 56.57%, highlighting financial stability and a solid asset base. Overall, the balance sheet indicates strong financial health with manageable debt levels.82
Very Positive
Cash Flow
Cash flow analysis shows a significant improvement in free cash flow, with a growth rate of 780.71% from the previous year, reflecting better cash management. Operating cash flow to net income ratio is strong at 2.05, indicating robust cash generation relative to profits. Despite these strengths, the company experienced fluctuations in free cash flow over the years, which may pose risks to cash liquidity.75
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 8.87B | 8.58B | 7.24B | 5.52B | 6.09B | Gross Profit |
| 2.01B | 1.83B | 1.33B | 774.00M | 434.00M | EBIT |
| 876.00M | 651.00M | 264.00M | -153.00M | -534.00M | EBITDA |
| 1.26B | 1.00B | 617.00M | 153.00M | -2.34B | Net Income Common Stockholders |
| 635.00M | 993.00M | 155.00M | -245.00M | -2.54B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 1.23B | 816.00M | 1.07B | 1.59B | 1.69B | Total Assets |
| 11.36B | 11.29B | 10.13B | 9.55B | 9.93B | Total Debt |
| 2.39B | 2.38B | 2.37B | 2.39B | 2.56B | Net Debt |
| 1.16B | 1.56B | 1.30B | 797.00M | 864.00M | Total Liabilities |
| 4.93B | 5.05B | 5.00B | 4.49B | 4.65B | Stockholders Equity |
| 6.38B | 6.17B | 5.13B | 5.06B | 5.28B |
| Cash Flow | Free Cash Flow | |||
| 953.00M | -140.00M | -393.00M | 90.00M | 700.00M | Operating Cash Flow |
| 1.30B | 143.00M | -179.00M | 291.00M | 926.00M | Investing Cash Flow |
| -471.00M | -293.00M | -238.00M | -196.00M | -144.00M | Financing Cash Flow |
| -406.00M | -103.00M | -96.00M | -189.00M | -259.00M |
NOV Technical Analysis
Negative
14.35
Price Trends
14.94
Negative
15.29
Negative
16.45
Negative
Market Momentum
-0.22
Positive
39.48
Neutral
29.01
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NOV, the sentiment is Negative. The current price of 14.35 is below the 20-day moving average (MA) of 15.20, below the 50-day MA of 14.94, and below the 200-day MA of 16.45, indicating a bearish trend. The MACD of -0.22 indicates Positive momentum. The RSI at 39.48 is Neutral, neither overbought nor oversold. The STOCH value of 29.01 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for NOV.
NOV 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% | |
76 Outperform | $5.43B | 8.89 | 10.12% | 1.93% | 3.42% | -35.98% | |
75 Outperform | $21.00B | 8.54 | 25.14% | 2.81% | -0.32% | -3.41% | |
72 Outperform | $53.62B | 12.69 | 21.59% | 2.81% | 9.58% | 6.53% | |
72 Outperform | $3.95B | 8.03 | 45.81% | 1.38% | 7.36% | 19.68% | |
57 Neutral | $8.34B | 5.35 | -5.98% | 7.29% | 0.20% | -69.45% |
* Energy Sector Average
Performance Comparison
NOV
NOV
14.96
-2.42
-13.92%
BKR
Baker Hughes Company
42.89
12.99
43.44%
FTI
TechnipFMC
26.67
4.82
22.06%
HAL
Halliburton
25.00
-10.38
-29.34%
SLB
Schlumberger
41.37
-7.73
-15.74%
WFRD
Weatherford International
56.11
-51.15
-47.69%
NOV Earnings Call Summary
Earnings Call Date: Feb 4, 2025 | % Change Since: -1.58% | Next Earnings Date: Apr 24, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted strong revenue growth, robust free cash flow, and strategic advancements in digital services and energy equipment. However, challenges in North American drilling activity, pressure pumping equipment demand, and offshore drilling market concerns were noted. Despite these challenges, there is optimism for future margin improvements and continued shareholder returns.Highlights
Revenue and Net Income Growth
Fourth quarter revenues grew 5% sequentially to $2.31 billion, and net income was $160 million resulting in fully diluted earnings of $0.41 per share. Full year 2024 revenues increased 3% to $8.87 billion, with a net income of $635 million.
Strong Free Cash Flow
NOV generated exceptionally strong free cash flow of $953 million for the full year 2024, representing 86% of EBITDA conversion.
Energy Equipment Segment Performance
The Energy Equipment segment led with a 5% revenue increase and a 250 basis points margin expansion due to recovering supply chains and higher-margin contracts.
Digital Services Expansion
NOV's digital services, including the Max Edge platform, gained traction with the user base more than doubling through 2024.
Shareholder Returns
Returned $337 million to shareholders through share buybacks and increased dividends, representing 41% of excess free cash flow.
Lowlights
Decline in North American Drilling Activity
Drilling activity fell 9% in North America, impacting revenue from certain shorter cycle capital equipment offerings.
Pressure Pumping Equipment Demand Challenges
Weak demand for pressure pumping and stimulation equipment in North America is expected to weigh on results in 2025.
Offshore Drilling Market Concerns
White space in offshore drillers' schedules and concerns about lower utilization were noted, impacting the outlook for rig aftermarket activity.
Margins in Energy Products and Services
Margins fell 120 basis points due to declines in drill pipe demand and related services, with a high fixed cost nature impacting profitability.
Company Guidance
During the NOV Fourth Quarter 2024 Earnings Conference Call, the company reported strong financial performance. For the fourth quarter, NOV achieved revenues of $2.31 billion with a net income of $160 million, translating to $0.41 per share. The EBITDA for this period was $302 million, representing 13.1% of sales. The book-to-bill ratio was 121%, indicating robust demand, while shipments out of backlog increased by 12% sequentially. For the full year 2024, NOV's revenues totaled $8.87 billion, and net income reached $635 million, or $1.60 per share. The EBITDA for the year was $1.1 billion, equating to 12.5% of sales, with a strong incremental flow-through of 38%. Free cash flow was notably strong at $953 million, which was 86% of EBITDA. The Energy Equipment segment led the revenue growth with a 5% increase and a 250 basis point expansion in segment margins. Despite challenges in certain markets, NOV continued to benefit from rising demand for its technologies, securing multiple large orders, and achieving a 22% backlog growth over the past four years. Looking ahead to 2025, NOV anticipates maintaining strong margins and shareholder returns, with a focus on market share gains and technology leadership.NOV Corporate Events
Executive/Board ChangesBusiness Operations and Strategy
NOV Appoints Chris Kendall to Board of Directors
Positive
Dec 16, 2024
NOV Inc. announced the appointment of Chris Kendall to its Board of Directors, effective December 15, 2024. Kendall, with over 30 years of experience in the global oil and gas industry, will serve on the Board’s Audit Committee. His extensive international and domestic experience, including roles at Denbury Inc. and Noble Energy, brings valuable expertise in upstream oilfield operations, carbon capture, and enhanced oil recovery to NOV. This addition aims to leverage his skills to further NOV’s strategic goals and create value for shareholders. The Board now comprises eleven directors, ten of whom are independent.
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.