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NOV Stumbles After Witnessing Wider-Than-Expected Q4 Loss
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Shares of NOV Inc. (NOV - Free Report) plunged more than 8% on Friday after the company reported a wider-than-expected fourth-quarter loss the day before. Bucking the overall upward trend in the energy sector, the oil and gas equipment company posted adjusted loss of 6 cents per share, 3 cents worse than the Zacks Consensus Estimate. The underperformance reflects COVID-driven headwinds in the form of supply chain bottlenecks, elevated costs and labor issues.
However, the bottom line improved from the year-ago loss of 42 cents on a steady recovery in demand and activity levels in the oilfield patch amid surging commodity prices.
NOV’s total revenues of $1.5 billion surpassed the Zacks Consensus Estimate by 3.7% and rose 14.3% from the year-ago sales of $1.3 billion.
Rig Technologies: The unit produced $431 million in fourth-quarter revenues, which edged past the Zacks Consensus Estimate of $429 million but compared unfavorably with the year-ago quarter’s $437 million. Adjusted EBITDA of $21 million fell short of the Zacks Consensus Estimate of $30.9 million but increased from the fourth-quarter 2020 figure of $19 million. The segment’s results were buoyed by NOV’s strong position in renewable energy, higher revenues from its rig manufacturing plant in Saudi Arabia and rising day rates in most rig categories, offset by a poor sales mix, supply chain issues and inflationary pressures.
Wellbore Technologies: NOV’s Wellbore Technologies segment’s revenues of $576 million increased by 54.4% year over year in the fourth quarter of 2021 and outpaced the consensus mark by 8.7%. The unit’s adjusted EBITDA of $88 million also surpassed the Zacks Consensus Estimate of $82 million and skyrocketed from the year-earlier quarter’s profit of $12 million. The positive comparisons could be attributed to continued growth in activity levels, market share gains and better realizations.
Completion & Production Solutions: Compared to a year ago, the segment’s revenues inched up 0.5% to $549 million and beat the Zacks Consensus Estimate of $539 million. However, the unit’s adjusted EBITDA of $2 million fell from the year-ago quarter’s income of $28 million and came well short of the consensus mark of $15.7 million primarily due to COVID-associated operational challenges.
Backlog
At the end of 2021, NOV’s capital equipment order backlog for Rig Technologies was $2.77 billion, including $191 million worth of new orders. The company’s Completion & Production Solutions operations currently have a $1.29 billion backlog, comprising $495 million of new orders, the highest since 2019.
Balance Sheet
As of Dec 31, 2021, the company had cash and cash equivalents of $1.6 billion and a long-term debt of $1.7 billion, with a debt-to-capitalization of 25.2%. Investors should know that during the fourth quarter, NOV reinstated its dividend of 5 cents per share.
Outlook
NOV remains optimistic about the market’s improving outlook and the emerging multi-year commodity price upcycle. As a reflection of the strong appetite for its products, the company’s Completion & Production Solutions backlog increased 85% year over year, with order intake reaching the highest level in more than two years. However, near-term challenges in the form of higher costs, scarcity of raw materials and supply chain hurdles will continue to act as margin headwinds. These will also limit NOV’s ability to capitalize on the market’s revival.
Vermilion Energy: Vermilion Energy is valued at around $2.7 billion. The Zacks Consensus Estimate for VET’s 2022 earnings has been revised 45% upward over the past 60 days.
Vermilion Energy delivered a four-quarter average earnings surprise of 54.4%, including a 100% beat in Q3. VET shares have gained around 210.8% in a year.
Murphy USA: Murphy USA is valued at around $4.7 billion. The consensus estimate for MUSA’s 2022 earnings has been revised 19.6% upward over the past 60 days.
MUSA beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 24.6%. Murphy USA has rallied around 43.3% in a year.
ExxonMobil: ExxonMobil has a projected earnings growth rate of 29.9% this year. The Zacks Consensus Estimate for XOM’s 2022 earnings has been revised 18.9% upward over the past 60 days.
ExxonMobil beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 5.8%. XOM shares have gained around 65.9% in a year.
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NOV Stumbles After Witnessing Wider-Than-Expected Q4 Loss
Shares of NOV Inc. (NOV - Free Report) plunged more than 8% on Friday after the company reported a wider-than-expected fourth-quarter loss the day before. Bucking the overall upward trend in the energy sector, the oil and gas equipment company posted adjusted loss of 6 cents per share, 3 cents worse than the Zacks Consensus Estimate. The underperformance reflects COVID-driven headwinds in the form of supply chain bottlenecks, elevated costs and labor issues.
However, the bottom line improved from the year-ago loss of 42 cents on a steady recovery in demand and activity levels in the oilfield patch amid surging commodity prices.
NOV’s total revenues of $1.5 billion surpassed the Zacks Consensus Estimate by 3.7% and rose 14.3% from the year-ago sales of $1.3 billion.
NOV Inc. Price, Consensus and EPS Surprise
NOV Inc. price-consensus-eps-surprise-chart | NOV Inc. Quote
Segment Performances
Rig Technologies: The unit produced $431 million in fourth-quarter revenues, which edged past the Zacks Consensus Estimate of $429 million but compared unfavorably with the year-ago quarter’s $437 million. Adjusted EBITDA of $21 million fell short of the Zacks Consensus Estimate of $30.9 million but increased from the fourth-quarter 2020 figure of $19 million. The segment’s results were buoyed by NOV’s strong position in renewable energy, higher revenues from its rig manufacturing plant in Saudi Arabia and rising day rates in most rig categories, offset by a poor sales mix, supply chain issues and inflationary pressures.
Wellbore Technologies: NOV’s Wellbore Technologies segment’s revenues of $576 million increased by 54.4% year over year in the fourth quarter of 2021 and outpaced the consensus mark by 8.7%. The unit’s adjusted EBITDA of $88 million also surpassed the Zacks Consensus Estimate of $82 million and skyrocketed from the year-earlier quarter’s profit of $12 million. The positive comparisons could be attributed to continued growth in activity levels, market share gains and better realizations.
Completion & Production Solutions: Compared to a year ago, the segment’s revenues inched up 0.5% to $549 million and beat the Zacks Consensus Estimate of $539 million. However, the unit’s adjusted EBITDA of $2 million fell from the year-ago quarter’s income of $28 million and came well short of the consensus mark of $15.7 million primarily due to COVID-associated operational challenges.
Backlog
At the end of 2021, NOV’s capital equipment order backlog for Rig Technologies was $2.77 billion, including $191 million worth of new orders. The company’s Completion & Production Solutions operations currently have a $1.29 billion backlog, comprising $495 million of new orders, the highest since 2019.
Balance Sheet
As of Dec 31, 2021, the company had cash and cash equivalents of $1.6 billion and a long-term debt of $1.7 billion, with a debt-to-capitalization of 25.2%. Investors should know that during the fourth quarter, NOV reinstated its dividend of 5 cents per share.
Outlook
NOV remains optimistic about the market’s improving outlook and the emerging multi-year commodity price upcycle. As a reflection of the strong appetite for its products, the company’s Completion & Production Solutions backlog increased 85% year over year, with order intake reaching the highest level in more than two years. However, near-term challenges in the form of higher costs, scarcity of raw materials and supply chain hurdles will continue to act as margin headwinds. These will also limit NOV’s ability to capitalize on the market’s revival.
Zacks Rank & Stock Picks
NOV currently carries a Zacks Rank #3 (Hold).
Some better-ranked players in the energy space are Vermilion Energy (VET - Free Report) , Murphy USA (MUSA - Free Report) and ExxonMobil (XOM - Free Report) . All the companies sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Vermilion Energy: Vermilion Energy is valued at around $2.7 billion. The Zacks Consensus Estimate for VET’s 2022 earnings has been revised 45% upward over the past 60 days.
Vermilion Energy delivered a four-quarter average earnings surprise of 54.4%, including a 100% beat in Q3. VET shares have gained around 210.8% in a year.
Murphy USA: Murphy USA is valued at around $4.7 billion. The consensus estimate for MUSA’s 2022 earnings has been revised 19.6% upward over the past 60 days.
MUSA beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 24.6%. Murphy USA has rallied around 43.3% in a year.
ExxonMobil: ExxonMobil has a projected earnings growth rate of 29.9% this year. The Zacks Consensus Estimate for XOM’s 2022 earnings has been revised 18.9% upward over the past 60 days.
ExxonMobil beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 5.8%. XOM shares have gained around 65.9% in a year.