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Why Is National Oilwell Varco (NOV) Up 5.3% Since Last Earnings Report?
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A month has gone by since the last earnings report for National Oilwell Varco (NOV - Free Report) . Shares have added about 5.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is National Oilwell Varco due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Second-Quarter 2018 Results
National Oilwell Varco reported second-quarter 2018 adjusted earnings of 6 cents per share, surpassing the Zacks Consensus Estimate of 3 cents. Stronger-than-expected contribution from all segments led to this stellar show.
Operating profit from the Rig Technologies segment totaled $62 million, way above the Zacks Consensus Estimate of $37.37 million. Further, operating profit from the Completion & Production Solutions segment came in at $40 million, surpassing the estimate of $28.60 million. Operating profit of $38 million at Wellbore Technologies also topped the Zacks Consensus Estimate of $35 million.
The bottom line also witnessed a solid rebound from the year-ago quarter’s loss of 20 cents on the back of crude pricing strength, increased demand and higher year-over-year revenues from all its segments.
Total revenues of $2,106 million outpaced the Zacks Consensus Estimate of $1,991 million. Revenues also rose 19.7% and 17.3% year over year and sequentially, respectively.
Segmental Performance
Rig Technologies: Revenues came in at $651 million compared with $546 million in the year-ago quarter, reflecting an increase of 19.2%. Revenues at the segment also rose 34.8% sequentially. Fast progress in new offshore rig construction led to the better performance.
The unit’s adjusted EBITDA was $84 million, 82.6% higher than $46 million recorded in the year-ago quarter. The segment’s EBITDA also surged 86.6% sequentially, driven by increase in the orders.
Wellbore Technologies: The segment’s revenues rose 29.2% year over year to $793 million. Strong demand from greater market adoption of the unit’s superior technology services drove revenues. Revenues from this segment also climbed around 12% sequentially on the back of increased activities in the Eastern Hemisphere.
Importantly, the unit improved from last year’s adjusted EBITDA of $66 million to $133 million, aided by higher volumes and pricing gains. In addition, the figure came in higher than the prior-quarter’s $103 million.
Completion & Production Solutions: Revenues at the segment were $738 million, up 13.2% from $652 million in the year-ago quarter. The top line also improved from the prior quarter’s figure of $670 million. Elevated demand for capital equipment in North America, along with increase in deliveries, drove the upside.
The unit recorded adjusted EBITDA of $94 million, marginally down from the year-ago figure of $98 million. However, the reported figure witnessed an increase of 28.7% sequentially.
Backlog
Capital equipment order backlog for Rig Technologies was $3.51 billion as of Jun 30, 2018, including $2.03 billion million worth of new orders. Notably, 88.7% of the new orders were associated with National Oilwell’s JV agreement with Saudi Aramco.
Moreover, the Completion & Production Solutions segment reported a backlog of $995 million in capital equipment order at the end of the second quarter. The figure included $398 million of new orders.
Balance Sheet
As of Jun 30, 2018, the company had cash and cash equivalents of $1,137 million and long-term debt of $2,707 million. The debt-to-capitalization ratio was around 16.2%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 37.37% due to these changes.
VGM Scores
At this time, National Oilwell Varco has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. The stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is primarily suitable for momentum investors while also being suitable for those looking for growth and to a lesser degree value.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, National Oilwell Varco has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is National Oilwell Varco (NOV) Up 5.3% Since Last Earnings Report?
A month has gone by since the last earnings report for National Oilwell Varco (NOV - Free Report) . Shares have added about 5.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is National Oilwell Varco due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Second-Quarter 2018 Results
National Oilwell Varco reported second-quarter 2018 adjusted earnings of 6 cents per share, surpassing the Zacks Consensus Estimate of 3 cents. Stronger-than-expected contribution from all segments led to this stellar show.
Operating profit from the Rig Technologies segment totaled $62 million, way above the Zacks Consensus Estimate of $37.37 million. Further, operating profit from the Completion & Production Solutions segment came in at $40 million, surpassing the estimate of $28.60 million. Operating profit of $38 million at Wellbore Technologies also topped the Zacks Consensus Estimate of $35 million.
The bottom line also witnessed a solid rebound from the year-ago quarter’s loss of 20 cents on the back of crude pricing strength, increased demand and higher year-over-year revenues from all its segments.
Total revenues of $2,106 million outpaced the Zacks Consensus Estimate of $1,991 million. Revenues also rose 19.7% and 17.3% year over year and sequentially, respectively.
Segmental Performance
Rig Technologies: Revenues came in at $651 million compared with $546 million in the year-ago quarter, reflecting an increase of 19.2%. Revenues at the segment also rose 34.8% sequentially. Fast progress in new offshore rig construction led to the better performance.
The unit’s adjusted EBITDA was $84 million, 82.6% higher than $46 million recorded in the year-ago quarter. The segment’s EBITDA also surged 86.6% sequentially, driven by increase in the orders.
Wellbore Technologies: The segment’s revenues rose 29.2% year over year to $793 million. Strong demand from greater market adoption of the unit’s superior technology services drove revenues. Revenues from this segment also climbed around 12% sequentially on the back of increased activities in the Eastern Hemisphere.
Importantly, the unit improved from last year’s adjusted EBITDA of $66 million to $133 million, aided by higher volumes and pricing gains. In addition, the figure came in higher than the prior-quarter’s $103 million.
Completion & Production Solutions: Revenues at the segment were $738 million, up 13.2% from $652 million in the year-ago quarter. The top line also improved from the prior quarter’s figure of $670 million. Elevated demand for capital equipment in North America, along with increase in deliveries, drove the upside.
The unit recorded adjusted EBITDA of $94 million, marginally down from the year-ago figure of $98 million. However, the reported figure witnessed an increase of 28.7% sequentially.
Backlog
Capital equipment order backlog for Rig Technologies was $3.51 billion as of Jun 30, 2018, including $2.03 billion million worth of new orders. Notably, 88.7% of the new orders were associated with National Oilwell’s JV agreement with Saudi Aramco.
Moreover, the Completion & Production Solutions segment reported a backlog of $995 million in capital equipment order at the end of the second quarter. The figure included $398 million of new orders.
Balance Sheet
As of Jun 30, 2018, the company had cash and cash equivalents of $1,137 million and long-term debt of $2,707 million. The debt-to-capitalization ratio was around 16.2%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 37.37% due to these changes.
VGM Scores
At this time, National Oilwell Varco has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. The stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is primarily suitable for momentum investors while also being suitable for those looking for growth and to a lesser degree value.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, National Oilwell Varco has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.