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Is a Beat Likely for National Oilwell (NOV) This Earnings Season?
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National Oilwell Varco, Inc. (NOV - Free Report) is set to release second-quarter 2020 earnings results on Jul 27, after the market closes.
The current Zacks Consensus Estimate is pegged at a loss of 11 cents per share for the to-be-reported quarter and the same for revenues stands at $1.54 billion.
Let’s delve into the factors that might have impacted the company’s performance in the June quarter.
Factors at Play
National Oilwell is embarked on a series of acquisitions, which already expanded its directional drilling and diversified its completion tools offering. For instance, the buyout of GustoMSC strengthened the company’s foothold in the offshore industry. Further, National Oilwell's joint venture with Saudi Aramco is expected to have supported its drilling technology franchise and also contributed to its earnings in the quarter to be reported.
Moreover, the company's cost-reduction efforts have been impressive. Its cash outflows reflecting capital expenditure saw a steady decline as the oil service firm reined in its spending levels. The company projects to generate around $625 million worth of annualized savings while realizing a sizeable sum from the suspension of dividend. All these strategic moves are expected to have driven second-quarter earnings and cash flows higher.
The domestic oil producers are unlikely to increase their spending anytime soon considering the coronavirus pandemic’s adverse impact on global energy demand. In response to this market instability, National Oilwell is likely to have sustained its disciplined approach to capital spending as well as maintained a better efficiency level during the second quarter.
However, the backlog orders in the Completion & Production Solutions segment are likely to have decreased in the second quarter amid coronavirus pandemic, resulting in crude price slump and weak drilling rig activities. Moreover, the prevalent bleak economic scenario is expected to have aggravated the already deteriorating conditions in the U.S. completion markets.
The Zacks Consensus Estimate for second-quarter backlog orders from the Completion & Production units is pegged at $275 million, indicating an 18% drop from the year-earlier reported figure of $335 million.
What Does Our Model Say?
Our proven Zacks model predicts an earnings beat for National Oilwell this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. But that’s not the case here.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: National Oilwell has an Earnings ESP of +8.10%.
Zacks Rank: National Oilwell carries a Zacks Rank #3, which increases the predictive power of ESP.
Highlights of Q1 Earnings & Surprise History
In first-quarter 2020, the company delivered adjusted earnings of 14 cents per share, beating the Zacks Consensus Estimate of 10 cents. Moreover, the bottom line rebounded from the year-ago loss of 20 cents per share. Particularly, strong contribution from the Completion & Production Solutions segment led to this outperformance.
However, total revenues of $1.88 billion underperformed the Zacks Consensus Estimate of $1.98 billion and also dipped 2.9% from the year-ago number of $1.94 billion due to weakness in the Wellbore Technologies unit.
As far as the earnings surprise track is concerned, this Houston, TX-based company’s bottom line missed the Zacks Consensus Estimate in two of the trailing four quarters and beat the same in the remaining two, the average negative surprise being 161.47%. This is depicted in the graph below:
National Oilwell Varco, Inc. Price and EPS Surprise
Here are some other firms worth considering from the energy space on the basis of our model, which shows that these too have the right combination of elements to beat on earnings this season:
Oceaneering International, Inc. (OII - Free Report) has an Earnings ESP of +34.62% and a Zacks Rank of 3, currently. The company is scheduled to release earnings on Jul 29.
Apache Corporation (APA - Free Report) has an Earnings ESP of +1.61% and is Zacks #3 Ranked at present. The firm is scheduled to release earnings on Jul 29.
Helmerich Payne, Inc. (HP - Free Report) has an Earnings ESP of +2.03% and is presently a #3 Ranked player. The firm is scheduled to release earnings on Jul 29.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.1% per year.
These 7 were selected because of their superior potential for immediate breakout.
Image: Bigstock
Is a Beat Likely for National Oilwell (NOV) This Earnings Season?
National Oilwell Varco, Inc. (NOV - Free Report) is set to release second-quarter 2020 earnings results on Jul 27, after the market closes.
The current Zacks Consensus Estimate is pegged at a loss of 11 cents per share for the to-be-reported quarter and the same for revenues stands at $1.54 billion.
Let’s delve into the factors that might have impacted the company’s performance in the June quarter.
Factors at Play
National Oilwell is embarked on a series of acquisitions, which already expanded its directional drilling and diversified its completion tools offering. For instance, the buyout of GustoMSC strengthened the company’s foothold in the offshore industry. Further, National Oilwell's joint venture with Saudi Aramco is expected to have supported its drilling technology franchise and also contributed to its earnings in the quarter to be reported.
Moreover, the company's cost-reduction efforts have been impressive. Its cash outflows reflecting capital expenditure saw a steady decline as the oil service firm reined in its spending levels. The company projects to generate around $625 million worth of annualized savings while realizing a sizeable sum from the suspension of dividend. All these strategic moves are expected to have driven second-quarter earnings and cash flows higher.
The domestic oil producers are unlikely to increase their spending anytime soon considering the coronavirus pandemic’s adverse impact on global energy demand. In response to this market instability, National Oilwell is likely to have sustained its disciplined approach to capital spending as well as maintained a better efficiency level during the second quarter.
However, the backlog orders in the Completion & Production Solutions segment are likely to have decreased in the second quarter amid coronavirus pandemic, resulting in crude price slump and weak drilling rig activities. Moreover, the prevalent bleak economic scenario is expected to have aggravated the already deteriorating conditions in the U.S. completion markets.
The Zacks Consensus Estimate for second-quarter backlog orders from the Completion & Production units is pegged at $275 million, indicating an 18% drop from the year-earlier reported figure of $335 million.
What Does Our Model Say?
Our proven Zacks model predicts an earnings beat for National Oilwell this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. But that’s not the case here.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: National Oilwell has an Earnings ESP of +8.10%.
Zacks Rank: National Oilwell carries a Zacks Rank #3, which increases the predictive power of ESP.
Highlights of Q1 Earnings & Surprise History
In first-quarter 2020, the company delivered adjusted earnings of 14 cents per share, beating the Zacks Consensus Estimate of 10 cents. Moreover, the bottom line rebounded from the year-ago loss of 20 cents per share. Particularly, strong contribution from the Completion & Production Solutions segment led to this outperformance.
However, total revenues of $1.88 billion underperformed the Zacks Consensus Estimate of $1.98 billion and also dipped 2.9% from the year-ago number of $1.94 billion due to weakness in the Wellbore Technologies unit.
As far as the earnings surprise track is concerned, this Houston, TX-based company’s bottom line missed the Zacks Consensus Estimate in two of the trailing four quarters and beat the same in the remaining two, the average negative surprise being 161.47%. This is depicted in the graph below:
National Oilwell Varco, Inc. Price and EPS Surprise
National Oilwell Varco, Inc. price-eps-surprise | National Oilwell Varco, Inc. Quote
Other Stocks to Consider
Here are some other firms worth considering from the energy space on the basis of our model, which shows that these too have the right combination of elements to beat on earnings this season:
Oceaneering International, Inc. (OII - Free Report) has an Earnings ESP of +34.62% and a Zacks Rank of 3, currently. The company is scheduled to release earnings on Jul 29.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Apache Corporation (APA - Free Report) has an Earnings ESP of +1.61% and is Zacks #3 Ranked at present. The firm is scheduled to release earnings on Jul 29.
Helmerich Payne, Inc. (HP - Free Report) has an Earnings ESP of +2.03% and is presently a #3 Ranked player. The firm is scheduled to release earnings on Jul 29.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.1% per year.
These 7 were selected because of their superior potential for immediate breakout.
See these time-sensitive tickers now >>