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Now (DNOW)
NYSE:DNOW
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Now (DNOW) AI Stock Analysis

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DNOW

Now

(NYSE:DNOW)

Rating:79Outperform
Price Target:
$18.50
▲(15.55% Upside)
DNOW's overall stock score reflects its strong financial foundation and positive earnings call insights, highlighting strategic growth initiatives and robust cash flow management. Technical indicators suggest positive momentum, though caution is advised due to potential overbought conditions. Valuation is moderate, with no dividend yield. Legal challenges related to the merger with MRC Global are a potential risk but are not factored into the score.

Now (DNOW) vs. SPDR S&P 500 ETF (SPY)

Now Business Overview & Revenue Model

Company DescriptionNow (DNOW) is a leading provider of supply chain solutions and services for the energy and industrial sectors. The company specializes in offering a wide range of products, including valves, pumps, fittings, and various industrial equipment, primarily targeting customers in oil and gas, petrochemical, and renewable energy industries. With a strong focus on operational efficiency and customer service, DNOW operates through a network of distribution centers and service locations, providing tailored solutions that meet the specific needs of its clients.
How the Company Makes MoneyDNOW generates revenue through the sale of industrial products and services, primarily serving the energy and industrial markets. Key revenue streams include direct product sales, rental services, and maintenance contracts for equipment. The company capitalizes on its extensive distribution network to provide timely delivery and support to its customers. Significant partnerships with leading manufacturers and suppliers enhance its product offerings and competitive advantage. Additionally, the company leverages its expertise in supply chain management to offer value-added services, thereby increasing customer loyalty and driving repeat business.

Now Earnings Call Summary

Earnings Call Date:Aug 06, 2025
(Q2-2025)
|
% Change Since: |
Next Earnings Date:Oct 29, 2025
Earnings Call Sentiment Positive
The earnings call highlighted DNOW's strong financial performance and strategic growth initiatives, particularly in the midstream sector and through its merger with MRC Global. However, challenges remain in the Canadian and international markets due to seasonal and macroeconomic factors.
Q2-2025 Updates
Positive Updates
Record-Breaking EBITDA Performance
The second quarter of 2025 represents the best second quarter EBITDA results in the company's public history at $51 million, up 11% sequentially.
Revenue Growth and Diversification
Revenue for the second quarter was $628 million, up 5% from the first quarter. The company's midstream business grew to approximately 27% of total DNOW revenue, more than doubling its contribution from the end of 2023.
Strong Financial Position
DNOW expanded its cash balance to $232 million, continues to carry no debt, and generated $41 million in free cash flow during the quarter.
MRC Global Transaction
DNOW's combination with MRC Global will generate $70 million of annual cost synergies within 3 years and is expected to drive significant value creation.
Negative Updates
Seasonal Revenue Decline in Canada
Revenue in Canada was $48 million, down $14 million, primarily due to the seasonal breakup period and additional macro impacts such as tariff uncertainty.
International Revenue Decline
International revenue was $52 million, sequentially lower by $11 million or 17%, due to nonrepeating first quarter project activity.
Challenges in Upstream Sector
U.S. operators remain disciplined, focusing on balance sheet management rather than production growth, resulting in limited project backlog.
Company Guidance
During DNOW's second quarter 2025 earnings call, significant achievements and future guidance were discussed, with key metrics highlighting the company's performance and strategic direction. DNOW reported a record second quarter EBITDA of $51 million, representing 8.1% of revenue, driven by robust midstream sector growth, which now constitutes approximately 27% of total revenue. Total revenue for the quarter was $628 million, marking a 5% increase from the first quarter. The company's gross margins remained stable at 22.9%. DNOW generated $41 million in free cash flow and maintained a strong financial position with $232 million in cash and no debt. Looking ahead, DNOW projects a low single-digit percentage increase in third-quarter revenues, with EBITDA expected to approach 8% of revenues. For the full year 2025, DNOW reaffirms its guidance for revenues to be flat to up in the high single-digit percentage range from 2024 levels, with EBITDA potentially approaching 8% of revenue, and a target of $150 million in free cash flow.

Now Financial Statement Overview

Summary
DNOW exhibits stable revenue and excellent cash flow management, with a strong balance sheet characterized by low leverage and high equity. However, profitability has declined, with net profit and EBIT margins decreasing, indicating a need for improved operational efficiency.
Income Statement
75
Positive
The company's gross profit margin remained stable at approximately 22.5%. The net profit margin decreased to 3.4% from 10.6%, primarily due to a significant drop in net income. Revenue growth was modest at 2.2%. EBIT margin dropped to 4.8% from 6.0%, indicating reduced operational efficiency. The EBITDA margin also decreased to 4.8% from 7.1%. Overall, the income statement shows stable revenue but declining profitability.
Balance Sheet
82
Very Positive
The company maintains a strong balance sheet with a low debt-to-equity ratio of 0.03, indicating minimal leverage risk. Return on Equity (ROE) decreased to 7.2% from 23.3%, reflecting lower profitability. The equity ratio improved to 69.6%, showcasing a strong equity base relative to assets. Overall, the balance sheet is solid with low leverage and high equity stability.
Cash Flow
88
Very Positive
The company demonstrated strong cash flow with a significant increase in free cash flow to $289 million, up 69% from the previous year. The operating cash flow to net income ratio increased to 3.68, indicating robust cash generation relative to earnings. Free cash flow to net income ratio also improved to 3.57. The cash flow statement reflects excellent cash management and growth in free cash flow.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue2.40B2.37B2.32B2.14B1.63B1.62B
Gross Profit551.00M535.00M535.00M506.00M357.00M292.00M
EBITDA125.00M148.00M166.00M170.00M40.00M-77.00M
Net Income83.00M81.00M247.00M128.00M5.00M-427.00M
Balance Sheet
Total Assets1.66B1.62B1.53B1.32B1.10B1.01B
Cash, Cash Equivalents and Short-Term Investments232.00M256.00M299.00M212.00M313.00M387.00M
Total Debt41.00M42.00M41.00M38.00M17.00M25.00M
Total Liabilities500.00M493.00M466.00M476.00M392.00M309.00M
Stockholders Equity1.16B1.13B1.06B842.00M712.00M699.00M
Cash Flow
Free Cash Flow210.00M289.00M171.00M-27.00M25.00M181.00M
Operating Cash Flow225.00M298.00M188.00M-18.00M30.00M189.00M
Investing Cash Flow-132.00M-304.00M-48.00M-87.00M-96.00M22.00M
Financing Cash Flow-58.00M-33.00M-55.00M-10.00M-6.00M-8.00M

Now Technical Analysis

Technical Analysis Sentiment
Positive
Last Price16.01
Price Trends
50DMA
14.97
Positive
100DMA
15.10
Positive
200DMA
15.00
Positive
Market Momentum
MACD
0.27
Negative
RSI
58.51
Neutral
STOCH
62.92
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DNOW, the sentiment is Positive. The current price of 16.01 is above the 20-day moving average (MA) of 15.28, above the 50-day MA of 14.97, and above the 200-day MA of 15.00, indicating a bullish trend. The MACD of 0.27 indicates Negative momentum. The RSI at 58.51 is Neutral, neither overbought nor oversold. The STOCH value of 62.92 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for DNOW.

Now Risk Analysis

Now disclosed 43 risk factors in its most recent earnings report. Now reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Now Peers Comparison

Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
79
Outperform
$1.71B20.827.29%2.78%-63.09%
79
Outperform
$2.44B11.9527.08%8.14%62.72%
78
Outperform
$2.91B14.6517.91%7.76%26.49%
64
Neutral
$1.74B8.0010.92%2.98%-9.32%-48.26%
64
Neutral
$10.73B15.657.61%2.01%2.80%-14.92%
59
Neutral
$1.01B25.994.18%3.22%-2.46%-44.11%
56
Neutral
$1.40B87.141.20%8.88%49.18%-87.20%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
DNOW
Now
16.01
3.98
33.08%
OII
Oceaneering International
24.68
1.08
4.58%
TDW
Tidewater
57.20
-17.23
-23.15%
WTTR
Select Energy Services
8.69
-1.64
-15.88%
LBRT
Liberty Oilfield Services
10.73
-7.97
-42.62%
AESI
Atlas Energy Solutions
11.15
-7.84
-41.28%

Now Corporate Events

M&A TransactionsLegal Proceedings
DNOW Faces Legal Challenges in MRC Global Merger
Negative
Aug 29, 2025

On June 26, 2025, DNOW Inc. entered into a merger agreement with MRC Global, involving a two-step merger process, with the goal of MRC Global becoming a wholly-owned subsidiary of DNOW. The merger has faced legal challenges, with several shareholder complaints and demand letters alleging material omissions in the joint proxy statement/prospectus, potentially violating securities laws. Despite believing the allegations are without merit, DNOW is voluntarily providing supplemental disclosures to avoid delays and distractions in closing the merger.

M&A TransactionsBusiness Operations and Strategy
DNOW Inc. Announces Merger with MRC Global
Positive
Jun 26, 2025

On June 26, 2025, DNOW Inc. announced a merger agreement with MRC Global Inc. in an all-stock transaction valued at approximately $1.5 billion, creating a leading energy and industrial solutions provider. The merger, expected to close in the fourth quarter of 2025, will expand the combined company’s scale and scope, offering complementary products and services across more than 350 locations in over 20 countries. The transaction, which has received unanimous board approval from both companies, is anticipated to generate $70 million in annual cost synergies within three years and be accretive to adjusted earnings per share in the first year. The merger aims to enhance growth opportunities, strengthen customer relationships, and improve cash flow generation, positioning the combined entity for long-term sustainable growth.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.Date of analysis: Aug 30, 2025