NOV (NOV) AI Stock Analysis

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NOV

(NYSE:NOV)

78Outperform

NOV's stock score reflects strong financial performance and a solid valuation, indicating that the stock may be undervalued. While technical analysis suggests bearish momentum, the company's strategic initiatives and robust financial health provide a positive outlook. Key strengths include profitability improvements and a strong balance sheet, while caution is advised due to technical challenges and market-specific risks.

Positive Factors

Financial Performance

Stock jumped 13% on better than expected margin and FCF outlook.

Growth Opportunities

Quality of capital equipment backlog, market share gains from higher-margin technologies and operational efficiencies to drive EBITDA growth.

Shareholder Returns

Management affirmed its commitment to distribute 50% of future FCF to shareholders through a combination of regular and supplemental dividends.

Negative Factors

Aftermarket Decline

Falling aftermarket is particularly concerning given the high associated margins, and management noted that aftermarket would likely decline mid-to-high single digits in 2025.

Earnings Outlook

Given a flattish EBITDA outlook, the upside appears limited, leading to a reduction in target price and a downgrade of NOV to Neutral.

Global Drilling Slowdown

The global drilling slowdown has intensified over the past few months, leading both offshore and land drillers to reduce capex, which is a clear headwind to NOV.

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

Market Cap

$4.48B

Dividend Yield2.43%

Average Volume (3M)5.74M

Price to Earnings (P/E)7.4

Beta (1Y)0.87

Revenue Growth3.42%

EPS Growth-35.98%

CountryUS

Employees34,010

SectorEnergy

Sector Strength55

IndustryOil & Gas Equipment & Services

Share Statistics

EPS (TTM)0.43

Shares Outstanding378,655,760

10 Day Avg. Volume5,542,574

30 Day Avg. Volume5,738,083

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)0.63

Price to Cash Flow (P/CF)2.40

P/FCF Ratio2.30

Enterprise Value/Market Cap1.54

Enterprise Value/RevenueN/A

Enterprise Value/Gross Profit3.43

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$16.83

Price Target Upside40.25% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering14

NOV Business Overview & Revenue Model

Company DescriptionNOV Inc. (formerly National Oilwell Varco) is a leading global provider of equipment and technology for the oil and gas industry. Headquartered in Houston, Texas, the company operates in various sectors, including rig technologies, wellbore technologies, and completion and production solutions. NOV's core products and services include drilling equipment, downhole tools, and comprehensive support services, designed to enhance the efficiency and safety of oil and gas operations worldwide.

How the Company Makes MoneyNOV generates revenue through the design, manufacture, sale, and service of a wide range of products and technologies for the oil and gas industry. Key revenue streams include sales of advanced drilling equipment, downhole tools, and wellbore intervention technologies. The company also earns money through long-term service agreements, providing maintenance, technical support, and training to its customers. Additionally, NOV benefits from strategic partnerships and collaborations with major oil and gas companies, which help to secure large-scale contracts and expand its market reach. The company's earnings are significantly influenced by global oil and gas industry trends, including exploration and production activity levels and technological advancements.

NOV Financial Statement Overview

Summary

NOV demonstrates strong financial performance with notable improvements in profitability and operational efficiency. The income statement shows revenue and profit growth, but a decrease in net income is a concern. The balance sheet highlights low leverage and financial stability, while cash flow shows robust cash generation despite past fluctuations.

Income Statement

Positive

The income statement shows a positive trajectory with significant revenue and profit growth. The TTM revenue increased by 3.33% compared to the previous year. Gross profit margin is healthy at 24.14%, and the net profit margin improved from previous deficits to 7.16% in the TTM. EBIT and EBITDA margins also indicate strong operational performance, standing at 11.35% and 12.76%, respectively. However, the net income has decreased compared to the previous year, which could be a point of concern.

Balance Sheet

Very Positive

The balance sheet reflects a stable financial structure with a debt-to-equity ratio of 0.37, indicating a low leverage level. Return on Equity (ROE) has improved to 9.88% in the TTM, suggesting efficient use of equity capital. The equity ratio is strong at 56.57%, highlighting financial stability and a solid asset base. Overall, the balance sheet indicates strong financial health with manageable debt levels.

Cash Flow

Positive

Cash flow analysis shows a significant improvement in free cash flow, with a growth rate of 780.71% from the previous year, reflecting better cash management. Operating cash flow to net income ratio is strong at 2.05, indicating robust cash generation relative to profits. Despite these strengths, the company experienced fluctuations in free cash flow over the years, which may pose risks to cash liquidity.

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

NOV Technical Analysis

Technical Analysis Sentiment

Negative

Last Price12.00

Price Trends

50DMA

13.86

Negative

100DMA

14.38

Negative

200DMA

15.55

Negative

Market Momentum

MACD

-0.55

Negative

RSI

40.01

Neutral

STOCH

43.64

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 is below the 20-day moving average (MA) of 12.46, below the 50-day MA of 13.86, and below the 200-day MA of 15.55, indicating a bearish trend. The MACD of -0.55 indicates Negative momentum. The RSI at 40.01 is Neutral, neither overbought nor oversold. The STOCH value of 43.64 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 (56)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NOV	78 Outperform	$4.48B	7.38	9.25%	2.43%	3.42%	-35.98%
FTI	77 Outperform	$12.04B	15.16	27.24%	0.70%	14.26%	294.37%
BKR	74 Outperform	$37.56B	12.75	18.04%	2.36%	6.22%	62.58%
SLB	72 Outperform	$46.38B	11.57	20.82%	3.21%	5.83%	-2.03%
HAL	70 Outperform	$17.75B	8.65	20.99%	3.26%	-2.54%	-17.53%
CHX	67 Neutral	$4.72B	14.95	18.18%	1.52%	-3.31%	4.82%
Sector *	56 Neutral	$7.14B	3.56	-6.61%	5.99%	>-0.01%	-50.21%

* Energy Sector Average

Performance Comparison

NOV

12.00

-6.14

-33.85%

BKR

Baker Hughes Company

35.92

4.05

12.71%

FTI

TechnipFMC

28.80

3.37

13.25%

HAL

Halliburton

20.51

-16.10

-43.98%

SLB

Schlumberger

34.11

-12.15

-26.26%

CHX

ChampionX

24.67

-8.47

-25.56%

NOV Earnings Call Summary

Earnings Call Date:Apr 28, 2025

(Q1-2025)

% Change Since: -1.96%|

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.