NOV (NOV) AI Stock Analysis

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NOV

(NYSE:NOV)

71Outperform

NOV's overall score reflects its strong financial performance, effective cash flow management, and attractive valuation. Technical analysis indicates some bearish momentum, but the stock may be oversold. Recent earnings calls present a mixed outlook with growth opportunities and challenges due to macroeconomic conditions. Leadership changes are a positive strategic move, enhancing the company's future prospects.

Positive Factors

Earnings

Stock jumped 13% on better than expected margin and free cash flow outlook.

Market Expansion

Growing international onshore adoption of unconventional drilling and completion techniques creating additional avenues for growth across their portfolio.

Shareholder Returns

Management affirmed its commitment to distribute 50% of future free cash flow to shareholders through a combination of regular and supplemental dividends and opportunistic share buybacks.

Negative Factors

Earnings Outlook

NOV expects third quarter and beyond to be challenging with a possible decline in industry activity.

Financial Performance

NOV underperformed the OIH by approximately 250 basis points after guiding second quarter and 2025 EBITDA below consensus.

Industry Activity

NOV expects the industry activity to get 'tougher, perhaps much tougher' with a likely decline.

NOV (NOV) vs. S&P 500 (SPY)

Market Cap

$4.82B

Dividend Yield2.34%

Average Volume (3M)4.56M

Price to Earnings (P/E)8.6

Beta (1Y)0.74

Revenue Growth0.54%

EPS Growth-39.88%

CountryUS

Employees34,010

SectorEnergy

Sector Strength45

IndustryOil & Gas Equipment & Services

Share Statistics

EPS (TTM)0.22

Shares Outstanding375,738,430

10 Day Avg. Volume3,659,544

30 Day Avg. Volume4,562,935

Financial Highlights & Ratios

PEG Ratio-1.18

Price to Book (P/B)0.74

Price to Sales (P/S)0.00

P/FCF Ratio4.08

Enterprise Value/Market Cap1.22

Enterprise Value/Revenue0.17

Enterprise Value/Gross Profit2.77

Enterprise Value/Ebitda1.24

Forecast

1Y Price Target

$15.69

Price Target Upside24.82% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering15

NOV Business Overview & Revenue Model

Company DescriptionNOV Inc., previously known as National Oilwell Varco, is a prominent provider within the oil and gas industry. The company offers an extensive range of equipment and components used in oil and gas drilling and production, oilfield services, and supply chain integration services to the upstream oil and gas industry. NOV operates through three segments: Rig Technologies, Wellbore Technologies, and Completion & Production Solutions, providing a comprehensive suite of products and services across the entire lifecycle of oil and gas operations.

How the Company Makes MoneyNOV Inc. generates revenue primarily through the sale and rental of equipment and technologies essential for oil and gas drilling and production. The Rig Technologies segment contributes significantly to revenue by providing capital equipment and integrated systems for drilling rigs. The Wellbore Technologies segment earns income by supplying a wide array of tools and technologies for drilling and formation evaluation, while the Completion & Production Solutions segment focuses on equipment and technologies for well completion, stimulation, and production optimization. NOV also benefits from service contracts, aftermarket sales, and repair services, which provide recurring revenue. Strategic partnerships with oil and gas operators and ongoing investments in technology and innovation further support NOV's revenue streams.

NOV Financial Statement Overview

Summary

NOV demonstrates a strong financial position with significant improvements in revenue growth, profitability, and cash flow generation. The income statement shows increased revenues and improved profit margins. The balance sheet is solid with manageable debt levels, and the cash flow statement indicates strong cash generation.

Income Statement

Positive

The income statement shows a strong recovery with a consistent increase in total revenue over the years. Gross Profit Margin for TTM is approximately 24.15%, indicating robust cost management. The Net Profit Margin improved significantly from negative values in 2020 to 6.68% in TTM, reflecting improved profitability. EBIT and EBITDA margins are healthy at 11.31% and 12.96% respectively, suggesting effective operational efficiency.

Balance Sheet

Positive

The balance sheet is solid with a Debt-to-Equity Ratio of 0.37, showing manageable leverage levels. The Return on Equity (ROE) for TTM is 9.07%, which is a positive indicator of profitability relative to equity. The Equity Ratio is stable at 57.61%, indicating a strong equity base relative to total assets.

Cash Flow

Positive

Cash flow statements indicate strong free cash flow generation with a Free Cash Flow to Net Income Ratio of 1.95 in TTM, showing efficient cash management. The Operating Cash Flow to Net Income Ratio is 2.58, highlighting strong cash generation from operations. Free Cash Flow has grown significantly compared to previous years.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
8.82B	8.87B	8.58B	7.24B	5.52B	6.09B
	Gross Profit
2.13B	2.01B	1.83B	1.33B	774.00M	434.00M
	EBIT
997.00M	876.00M	651.00M	264.00M	-153.00M	-534.00M
	EBITDA
1.22B	1.26B	1.00B	617.00M	153.00M	-2.34B
	Net Income Common Stockholders
589.00M	635.00M	993.00M	155.00M	-245.00M	-2.54B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
1.16B	1.23B	816.00M	1.07B	1.59B	1.69B
	Total Assets
11.27B	11.36B	11.29B	10.13B	9.55B	9.93B
	Total Debt
2.37B	2.39B	2.38B	2.37B	2.39B	2.56B
	Net Debt
1.22B	1.16B	1.56B	1.30B	797.00M	864.00M
	Total Liabilities
4.78B	4.93B	5.05B	5.00B	4.49B	4.65B
	Stockholders Equity
6.44B	6.38B	6.17B	5.13B	5.06B	5.28B
Cash Flow		Free Cash Flow
1.15B	953.00M	-140.00M	-393.00M	90.00M	700.00M
	Operating Cash Flow
1.52B	1.30B	143.00M	-179.00M	291.00M	926.00M
	Investing Cash Flow
-241.00M	-471.00M	-293.00M	-238.00M	-196.00M	-144.00M
	Financing Cash Flow
-584.00M	-406.00M	-103.00M	-96.00M	-189.00M	-259.00M

NOV Technical Analysis

Technical Analysis Sentiment

Negative

Last Price12.57

Price Trends

50DMA

13.19

Negative

100DMA

14.03

Negative

200DMA

15.09

Negative

Market Momentum

MACD

-0.03

Negative

RSI

48.77

Neutral

STOCH

62.05

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NOV, the sentiment is Negative. The current price of 12.57 is above the 20-day moving average (MA) of 12.34, below the 50-day MA of 13.19, and below the 200-day MA of 15.09, indicating a neutral trend. The MACD of -0.03 indicates Negative momentum. The RSI at 48.77 is Neutral, neither overbought nor oversold. The STOCH value of 62.05 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for NOV.

NOV Peers Comparison

Overall Rating

UnderperformOutperform

Sector (57)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
FTI	77 Outperform	$13.12B	20.58	27.24%	0.64%	―	―
BKR	74 Outperform	$37.44B	12.91	18.04%	2.27%	6.22%	62.58%
SLB	72 Outperform	$48.65B	12.14	20.82%	3.10%	5.83%	-2.03%
NOV	71 Outperform	$4.82B	8.56	9.29%	2.34%	0.54%	-39.88%
HAL	70 Outperform	$17.94B	8.90	20.99%	3.20%	-2.54%	-17.53%
CHX	64 Neutral	$4.97B	17.15	16.16%	1.46%	-4.17%	-17.99%
Sector *	57 Neutral	$7.13B	3.45	-3.67%	5.68%	0.46%	-50.35%

* Energy Sector Average

Performance Comparison

NOV

12.57

-6.05

-32.49%

BKR

Baker Hughes Company

37.91

5.55

17.15%

FTI

TechnipFMC

31.19

4.41

16.47%

HAL

Halliburton

20.87

-16.22

-43.73%

SLB

Schlumberger

35.11

-11.87

-25.27%

CHX

ChampionX

25.50

-8.20

-24.33%

NOV Earnings Call Summary

Earnings Call Date:Apr 28, 2025

(Q1-2025)

% Change Since: 2.70%|

Next Earnings Date:Jul 23, 2025

Earnings Call Sentiment Neutral

The earnings call indicates a company that is performing well in certain areas, such as EBITDA growth, cash flow, and offshore production, while facing significant challenges from tariffs, macroeconomic uncertainty, and specific market declines. The company is making strategic adjustments to mitigate these challenges, but the outlook is cautious.

Q1-2025 Updates

Positive Updates

Improved EBITDA and Cash Flow

NOV reported an EBITDA of $252 million for Q1 2025, marking a 5% increase. EBITDA margins expanded by 80 basis points to 12%, with 14 consecutive quarters of year-over-year margin improvement. Additionally, NOV generated $135 million in cash from operations and $51 million in free cash flow.

Strong Performance in Energy Equipment Segment

The Energy Equipment segment increased margins by 430 basis points to 14.4% of sales, driven by high-margin backlog and operational efficiencies. Bookings for the quarter increased by 12% year-over-year, with a backlog of $4.41 billion, up 12% from Q1 2024.

Offshore Production Outlook

The outlook for offshore production remains robust, with 2025 potentially having more awards for FPSOs than previous years. NOV's subsea flexible pipe business and Process Systems continue to show strong performance, with significant revenue growth and improved margins.

Strategic Positioning and Product Innovation

NOV introduced new products that improve efficiency, safety, and environmental impact, gaining significant market share. The company is well-positioned to supply technologies needed for deepwater and international shales, anticipating future industry trends.

Negative Updates

Revenue Decline in Energy Product and Services Segment

The Energy Product and Services segment saw a 2% revenue decrease due to lower global activity, with EBITDA declining $29 million to $145 million. The sales mix was less favorable, leading to higher decrementals.

Tariff and Macroeconomic Challenges

Emerging trade wars and tariff impacts pose risks, with anticipated tariff expenses of $8 million to $10 million in Q2 2025, increasing to approximately $15 million per quarter thereafter. The broader macroeconomic uncertainty and potential lower oilfield activity are concerns.

Challenges in North American and Specific International Markets

Lower commodity prices and macroeconomic headwinds have North American E&Ps running downside scenarios. Activity is most at risk in North America, Mexico, and Saudi Arabia conventional activity.

Decrease in Aftermarket Revenue

Aftermarket revenues declined 11% year-over-year in the Drilling Equipment business, driven by lower spare parts bookings and some delays in recertification projects.

Company Guidance

During the Q1 2025 earnings call, NOV Inc. reported several key metrics and provided guidance for the upcoming quarters. The company recorded revenues of $2.1 billion and a net income of $73 million, translating to $0.19 per fully diluted share. Adjusted EBITDA was $252 million, representing 12% of sales, an increase of 80 basis points year-over-year. The Energy Equipment segment improved its margins by 430 basis points compared to Q1 2024, driven by strong demand for deepwater production equipment and cost reductions. However, the Energy Products and Services segment faced margin pressures due to a decline in drilling-related capital equipment sales, despite outperforming a 5% reduction in global drilling activity. Looking ahead, NOV expects modest sequential growth in revenues and EBITDA for Q2 2025 but anticipates potential challenges in the latter half of the year due to macroeconomic headwinds, including an emerging trade war and OPEC's decision to increase oil supply. The company remains focused on operational efficiencies and cost management to navigate these uncertainties.

NOV Corporate Events

Executive/Board ChangesBusiness Operations and Strategy

NOV Announces Leadership Changes and Executive Promotions

Positive

Mar 20, 2025

On March 17, 2025, NOV Inc. announced significant leadership changes as part of its long-term succession planning. Jose Bayardo was promoted to President and Chief Operating Officer, while Rodney Reed was appointed as Senior Vice President and Chief Financial Officer. These appointments reflect NOV’s commitment to leveraging seasoned executives to drive superior results for stakeholders. The changes also include adjustments to compensation packages and incentive plans for both executives, highlighting the company’s strategic focus on strengthening its leadership team to maintain its industry positioning.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.