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Can National Oilwell (NOV) Spring a Surprise in Q1 Earnings?
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Energy equipment supplier National Oilwell Varco, Inc. (NOV - Free Report) is set to release first-quarter 2017 results before the opening bell on Apr 27.
In the preceding three-month period, the company delivered a positive earnings surprise of 48.28% due to its cost reduction efforts. Further, the company had reported average positive surprise of 20.35% in the trailing four quarters.
Let’s see how things are shaping up for this announcement.
Factors at Play
Houston, TX-based National Oilwell is a world leader in the designing, manufacturing and selling of comprehensive systems, components, products, and equipment used in oil and gas drilling and production worldwide.
With U.S. rig count falling to record levels last year, the capital equipment sales of the company declined considerably. However, as the commodity prices improve and drilling activities pick up, demand for oilfield equipment is likely to rise which could drive the earnings of the company. Nevertheless, even with the increased drilling activities, drillers might have inventories which were accumulated in the preceding months. This could in turn reduce demand for new equipment hampering revenues for companies like National Oilwell. Further, management of the company expects the offshore and international markets to remain challenging in 2017 affecting earnings adversely.
However on the positive side, National Oilwell has managed to come out of the slump financially with a cash balance of $1.4 billion. The company’s decision to cut dividends has been painful for the investors but has strengthened the liquidity and financial position of the company.
Further, there were some new developments in the quarter which can affect earnings positively. National Oilwell recently sold 75,000 hydraulic horsepower of fracture stimulation pumps and associated support equipment. This activity is expected to boost returns in first quarter. The company had acquired Aberdeen-based solids control equipment manufacturer Axiom Process in January. The acquisition is expected to improve National Oilwell’s current portfolio and add to its earnings. All this is also reflected in the price performance of the company. The company underperformed the Zacks categorized Oil and Gas Mechanical & Equipment industry. The company’s shares rallied 7% in the last three months, while the broader industry inched up 0.6%.
Our proven model does not conclusively show that National Oilwell will beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate are both pegged at a loss of 19 cents. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Zacks Rank: National Oilwell carries a Zacks Rank #3 which when combined with a 0.00 % ESP makes surprise prediction difficult.
We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
While earnings beat looks uncertain for National Oilwell, here are some firms from the energy space that you may want to consider on the basis of our model, which shows that they have the right combination of elements to post earnings beat this quarter.
Rowan Companies plc is expected to release first-quarter earnings results on May 2. The company has an Earnings ESP of +14.29% and carries a Zacks Rank #3.
Transocean Ltd. (RIG - Free Report) is expected to release first-quarter earnings results on May 3. The company has an Earnings ESP of +11.11% and has a Zacks Rank #3.
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Can National Oilwell (NOV) Spring a Surprise in Q1 Earnings?
Energy equipment supplier National Oilwell Varco, Inc. (NOV - Free Report) is set to release first-quarter 2017 results before the opening bell on Apr 27.
In the preceding three-month period, the company delivered a positive earnings surprise of 48.28% due to its cost reduction efforts. Further, the company had reported average positive surprise of 20.35% in the trailing four quarters.
Let’s see how things are shaping up for this announcement.
Factors at Play
Houston, TX-based National Oilwell is a world leader in the designing, manufacturing and selling of comprehensive systems, components, products, and equipment used in oil and gas drilling and production worldwide.
With U.S. rig count falling to record levels last year, the capital equipment sales of the company declined considerably. However, as the commodity prices improve and drilling activities pick up, demand for oilfield equipment is likely to rise which could drive the earnings of the company. Nevertheless, even with the increased drilling activities, drillers might have inventories which were accumulated in the preceding months. This could in turn reduce demand for new equipment hampering revenues for companies like National Oilwell. Further, management of the company expects the offshore and international markets to remain challenging in 2017 affecting earnings adversely.
However on the positive side, National Oilwell has managed to come out of the slump financially with a cash balance of $1.4 billion. The company’s decision to cut dividends has been painful for the investors but has strengthened the liquidity and financial position of the company.
Further, there were some new developments in the quarter which can affect earnings positively. National Oilwell recently sold 75,000 hydraulic horsepower of fracture stimulation pumps and associated support equipment. This activity is expected to boost returns in first quarter. The company had acquired Aberdeen-based solids control equipment manufacturer Axiom Process in January. The acquisition is expected to improve National Oilwell’s current portfolio and add to its earnings. All this is also reflected in the price performance of the company. The company underperformed the Zacks categorized Oil and Gas Mechanical & Equipment industry. The company’s shares rallied 7% in the last three months, while the broader industry inched up 0.6%.
National Oilwell Varco, Inc. Price and Consensus
National Oilwell Varco, Inc. Price and Consensus | National Oilwell Varco, Inc. Quote
Earnings Whispers
Our proven model does not conclusively show that National Oilwell will beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate are both pegged at a loss of 19 cents. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Zacks Rank: National Oilwell carries a Zacks Rank #3 which when combined with a 0.00 % ESP makes surprise prediction difficult.
We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
While earnings beat looks uncertain for National Oilwell, here are some firms from the energy space that you may want to consider on the basis of our model, which shows that they have the right combination of elements to post earnings beat this quarter.
NOW Inc. (DNOW - Free Report) is expected to release first-quarter earnings results on May 3. The company has an Earnings ESP of +17.39% and has a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Rowan Companies plc is expected to release first-quarter earnings results on May 2. The company has an Earnings ESP of +14.29% and carries a Zacks Rank #3.
Transocean Ltd. (RIG - Free Report) is expected to release first-quarter earnings results on May 3. The company has an Earnings ESP of +11.11% and has a Zacks Rank #3.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020. Click here for the 6 trades >>