Back to top

Analyst Blog

Global large-cap energy equipment maker, National Oilwell Varco (NOV - Analyst Report) has recently increased its quarterly cash dividend payment by 100% to 26 cents per share, up from 13 cents per share paid in the previous quarter. The new dividend will be paid on Jun 28, 2013, to shareholders of record as on Jun 14, 2013.

Importantly, National Oilwell has been increasing its payout every year since it commenced paying dividends in 2009. If the current dividend is maintained for a year, the annualized dividend payout of the company would be $1.04 per share.

Based on the closing price of $70.17 as on May 20, 2013, the proposed dividend affirms a yield of 1.5%. A steady dividend payout facilitates the long-term strategy of the company to provide attractive risk-adjusted returns to its stockholders.

Management believes the dividend hike shows consistently good performance and is reflective of its solid operating results.

Houston, Texas based National Oilwell is a world leader in the design, manufacture, and sale of comprehensive systems, components, products, and equipment used in oil and gas drilling and production worldwide. The company reached its current form following the Mar 2005 merger between National Oilwell and Varco International. National Oilwell organizes its operations in three business segments: Rig Technology, Petroleum Services & Supplies, and Distribution & Transmission.

With new competitors entering the market and reduced capital expenditure by the drilling contractors, National Oilwell has seen its new equipment package pricing fall around 10% below the level achieved during the peak of 2007–2008. In particular, the company’s margins have been hit hard by the ongoing North American drilling slump. We expect the situation – characterized by tepid demand and weak pricing – to normalize only sometime in late 2013.

National Oilwell currently carries a Zacks Rank #4 (Sell), implying that it is expected to underperform the broader U.S. equity market over the next one to three months.

However, in the energy sector three firms that are expected to significantly outperform the broader U.S. equity market over the next one to three months are CNOOC Ltd. (CEO - Analyst Report), InterOil Corporation (IOC - Snapshot Report) and EPL Oil & Gas Inc. . All three firms retain a Zacks Rank #1 (Strong Buy).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
TRIQUINT SE… TQNT 20.67 +6.52%
RF MICRO DE… RFMD 12.47 +6.04%
VASCO DATA… VDSI 14.77 +4.68%
BANCO DO BR… BDORY 15.53 +3.95%
STRATTEC SE… STRT 80.24 +3.00%