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Things You Must Consider Ahead of NOV's Q1 Earnings Report

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NOV Inc. (NOV - Free Report) is set to release first-quarter 2021 results on Tuesday Apr 27, after the closing bell. The current Zacks Consensus Estimate for the to-be-reported quarter is a loss of 23 cents per share while the same for revenues is $1.23 billion.

Let’s delve into the factors that might have impacted this oilfield services company’s performance in the March quarter. But it’s worth taking a look at NOV’s previous-quarter results first.

Highlights of Q4 Earnings & Surprise History

In the last reported quarter, this Houston, TX-based provider of equipment and technology to the oil and gas exploration and production firms reported an adjusted loss of 42 cents per share, wider than the Zacks Consensus Estimate of a loss of 12 cents. However, the year-ago bottom line was a profit of 13 cents per share. This downside could be attributed to weakness in the Rig Technologies and the Completion & Production Solutions units, partially offset by better-than-expected revenues from the Wellbore Technologies unit.

Total revenues of $1.33 billion were in line with the Zacks Consensus Estimate. However, the top line plunged 41.6% from the year-ago number of $2.28 billion.

As far as earnings surprises are concerned, NOV’s bottom line beat the Zacks Consensus Estimate in three of the last four quarters and missed the same in the remaining one, witnessing a negative surprise of 21.19%, on average. This is depicted in the graph below:

NOV Inc. Price and EPS Surprise

NOV Inc. Price and EPS Surprise

NOV Inc. price-eps-surprise | NOV Inc. Quote

Factors to Consider

Last month, NOV trimmed its first-quarter 2021 guidance due to weather disturbances and lower-than-expected customer demands.

The company’s Rig Technologies unit and the Completion & Production Solutions unit were affected by logistical troubles from coronavirus-induced restrictions in Southeast Asia and postponements in certain projects. This, in turn, hurt the quarterly performance of its three units, namely Rig Technologies, Wellbore Technologies and Completion & Production Solutions, which fell below the company’s expectations. Consequently, the Zacks Consensus Estimate for the first-quarter adjusted EBITDA for Rig Technologies and Wellbore Technologies is pegged at $3.01 million and $21.44 million, respectively, indicating a decrease of 94.6% and 79.2% each from the corresponding year-ago reported figures. Meanwhile, the Zacks Consensus Estimate for the first-quarter adjusted EBITDA for Completion & Production Solutions is pegged at a loss of $2.34 million. However, the year-ago quarter’s adjusted EBITDA was a profit of $71 million.

Also, shortage in the supply of acute global glass fiber hampered NOV’s fiberglass systems operations in the quarter under review. As a result of these headwinds, the company now foresees its first-quarter sales in the $1.20-$1.25 billion range, indicating a decline from the year-ago quarter’s reported figure of $1.88 billion while its adjusted EBITDA loss is anticipated in the $15-$25 million band. However, the year-ago quarter reported adjusted EBITDA profit of $178 million.

What Does Our Model Say?

The proven Zacks model does not conclusively predict an earnings beat for NOV 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: NOV has an Earnings ESP of -5.60%.

Zacks Rank: NOV has a Zacks Rank #4 (Sell), currently.

Stocks to Consider

While an earnings beat looks uncertain for NOV, here are some firms from the energy  space that you may want to consider on the basis of our model:

Helix Energy Solutions Group, Inc. (HLX - Free Report) has an Earnings ESP of +25.00% and a Zacks Rank #2, currently. You can see the complete list of today’s Zacks #1 Rank stocks here. The firm is scheduled to release earnings on Apr 26.

BP plc (BP - Free Report) has an Earnings ESP of +5.10% and is Zacks #2 Ranked, presently. The firm is scheduled to release earnings on Apr 27.

Baker Hughes (BKR - Free Report) has an Earnings ESP of +3.97% and is Zacks #3 Ranked, currently. The firm is scheduled to release earnings on Apr 21.

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