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DNOW Earnings Miss Estimates in Q1, Revenues Increase Y/Y
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Key Takeaways
DNOW Q1 adjusted EPS missed estimates, while revenues jumped 97.5% year over year.
U.S. and International segments posted strong sales growth, offset by weaker Canada results.
Rising product and SG&A costs drove operating loss and compressed EBITDA margins.
DNOW Inc. (DNOW - Free Report) announced its first-quarter 2026 results, wherein its reported loss per share was 24 cents against earnings of 19 cents in the year-ago quarter.
Adjusted earnings per share came in at a penny compared with 22 cents a year ago. The figure missed the Zacks Consensus Estimate of five cents.
Revenues for the first quarter increased 97.5% year over year to $1.18 billion, surpassing the Zacks Consensus Estimate of $1.13 billion.
Revenue Mix and Segment Performance
In the first quarter, the US generated revenues of $985 million, reflecting growth of 107.8% year over year. International revenues were $147 million, an increase of 133.3% year over year. Revenues from Canada totaled $51 million, down 17.7%.
DNOW’s cost of products sold increased 114.7% year over year to $990 million. The gross profit rose 40% to $193 million. Selling, general and administrative expenses surged 123% to $243 million.
The company’s operating loss came in at $50 million against operating income of $29 million in the year-ago quarter. Adjusted EBITDA fell 15.2% year over year to $39 million, while the margin dropped 440 basis points to 3.3%.
Balance Sheet, Cash Flow and Capital Allocation
DNOW finished 2025 with cash and cash equivalents of $116 million, long-term debt of $571 million, net debt of $455 million and net leverage of 2.3x. Exiting the quarter, the company’s liquidity was approximately $379 million.
Cash used in operating activities totaled $95 million in the quarter. The company repurchased $50 million of stock in the first quarter, under total repurchase authorization of $160 million.
Outlook
For 2026, DNOW expects to generate revenues of nearly $5 billion. While adjusted EBITDA margin is projected to be 4.5%, cash from operations is anticipated to be $100-$200 million.
For the second quarter, revenues are expected to grow in the mid-to-high single-digit percentage range on a sequential basis. DNOW anticipates the U.S. and International segments to deliver revenue growth sequentially, while revenues from Canada are likely to decline.
Zacks Rank and Stocks to Consider
The company currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks are discussed below:
DXP Enterprises’ earnings surpassed the consensus estimate by 52.8% in the last reported quarter. In the past 60 days, the Zacks Consensus Estimate for DXPE’s 2026 earnings has increased 17.2%.
Kennametal (KMT - Free Report) presently sports a Zacks Rank of 1. Kennametal’s earnings surpassed the consensus estimate thrice and missed once in the trailing four quarters. The average earnings surprise was 35.4%. In the past 60 days, the Zacks Consensus Estimate for Kennametal’s fiscal 2026 earnings has increased 9%.
Powell Industries (POWL - Free Report) currently carries a Zacks Rank of 2. Powell’s earnings topped the consensus estimate thrice and missed once in the trailing four quarters. The average earnings surprise was 7.8%. In the past 60 days, the Zacks Consensus Estimate for Powell’s fiscal 2026 earnings has increased 4.7%.
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DNOW Earnings Miss Estimates in Q1, Revenues Increase Y/Y
Key Takeaways
DNOW Inc. (DNOW - Free Report) announced its first-quarter 2026 results, wherein its reported loss per share was 24 cents against earnings of 19 cents in the year-ago quarter.
Adjusted earnings per share came in at a penny compared with 22 cents a year ago. The figure missed the Zacks Consensus Estimate of five cents.
Revenues for the first quarter increased 97.5% year over year to $1.18 billion, surpassing the Zacks Consensus Estimate of $1.13 billion.
Revenue Mix and Segment Performance
In the first quarter, the US generated revenues of $985 million, reflecting growth of 107.8% year over year. International revenues were $147 million, an increase of 133.3% year over year. Revenues from Canada totaled $51 million, down 17.7%.
DNOW Inc. Price, Consensus and EPS Surprise
DNOW Inc. price-consensus-eps-surprise-chart | DNOW Inc. Quote
Margin Performance
DNOW’s cost of products sold increased 114.7% year over year to $990 million. The gross profit rose 40% to $193 million. Selling, general and administrative expenses surged 123% to $243 million.
The company’s operating loss came in at $50 million against operating income of $29 million in the year-ago quarter. Adjusted EBITDA fell 15.2% year over year to $39 million, while the margin dropped 440 basis points to 3.3%.
Balance Sheet, Cash Flow and Capital Allocation
DNOW finished 2025 with cash and cash equivalents of $116 million, long-term debt of $571 million, net debt of $455 million and net leverage of 2.3x. Exiting the quarter, the company’s liquidity was approximately $379 million.
Cash used in operating activities totaled $95 million in the quarter. The company repurchased $50 million of stock in the first quarter, under total repurchase authorization of $160 million.
Outlook
For 2026, DNOW expects to generate revenues of nearly $5 billion. While adjusted EBITDA margin is projected to be 4.5%, cash from operations is anticipated to be $100-$200 million.
For the second quarter, revenues are expected to grow in the mid-to-high single-digit percentage range on a sequential basis. DNOW anticipates the U.S. and International segments to deliver revenue growth sequentially, while revenues from Canada are likely to decline.
Zacks Rank and Stocks to Consider
The company currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks are discussed below:
DXP Enterprises (DXPE - Free Report) presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
DXP Enterprises’ earnings surpassed the consensus estimate by 52.8% in the last reported quarter. In the past 60 days, the Zacks Consensus Estimate for DXPE’s 2026 earnings has increased 17.2%.
Kennametal (KMT - Free Report) presently sports a Zacks Rank of 1. Kennametal’s earnings surpassed the consensus estimate thrice and missed once in the trailing four quarters. The average earnings surprise was 35.4%. In the past 60 days, the Zacks Consensus Estimate for Kennametal’s fiscal 2026 earnings has increased 9%.
Powell Industries (POWL - Free Report) currently carries a Zacks Rank of 2. Powell’s earnings topped the consensus estimate thrice and missed once in the trailing four quarters. The average earnings surprise was 7.8%. In the past 60 days, the Zacks Consensus Estimate for Powell’s fiscal 2026 earnings has increased 4.7%.