On Jun 18, Zacks Investment Research downgraded global
large-cap energy equipment maker,
National Oilwell Varco
) to a Zacks Rank #5 (Strong Sell).
Why the Downgrade?
National Oilwell witnessed sharp downward estimate revisions
after reporting weak first-quarter 2013 results. On Apr 26,
National Oilwell reported weaker-than-expected first-quarter 2013
earnings due to lower operating margin in all its segments.
Earnings per share (excluding transaction costs) of $1.29 missed
the Zacks Consensus Estimate by 8 cents and the year-ago adjusted
profit by 15 cents.
With regard to business units, Petroleum Services & Supplies'
operating profit decreased 19.8% from the first quarter of 2012
to $311.0 million. The negative comparison was due to lower
demand for products and services in a weak North American market.
The recent weakness in North American onshore drilling has been a
negative for National Oilwell, which derives a substantial
portion of its revenues/earnings from the region. Moreover, in a
competitive and soft pricing environment, we expect some downside
for the National Oilwell stock during the next few quarters.
A combination of all these factors weighed on the earnings
estimates for National Oilwell in the last 60 days. Most of the
estimates were revised downward over the same time frame for the
second quarter of 2013 (13 out of 15) and full-year 2013 (16 out
of 17). The Zacks Consensus Estimate for the second quarter of
2013 has gone down by 8.2% to $1.34 per share while it dropped
8.16% to $5.63 per share for 2013.
Other Stocks to Consider
Not all oilfield equipment makers are performing as poorly as
National Oilwell. The stocks of
Natural Gas Services Group Inc.
Lufkin Industries Inc.
) are worth considering. All these stocks carry a Zacks Rank #2
DRIL-QUIP INC (DRQ): Free Stock Analysis
LUFKIN INDS (LUFK): Free Stock Analysis
NATURAL GAS SVC (NGS): Free Stock Analysis
NATL OILWELL VR (NOV): Free Stock Analysis
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