Global large-cap energy equipment maker
National Oilwell Varco Inc.
) reported better-than-expected second quarter earnings, buoyed
by rising international demand. Earnings per share (excluding
transaction costs and one time gains) came in at $1.34, above the
Zacks Consensus Estimate of $1.32
However, NOV's performance deteriorated considerably from the
year-ago adjusted profit of $1.52 per share amid a choppy North
Quarterly revenue jumped 6.9% year over year - from $5,319.0
million to $5,687.0 million - but was just short of the Zacks
Consensus Estimate of $5,696.0 million. .
Revenue in the Rig Technology segment increased 11.6% year over
year to $2,843.0 million, while revenue out of backlog was up 10%
from the corresponding period last year. However, the segment's
operating profit was down marginally (by 0.7% year over year) to
Rig Technology's profitability during the quarter was hampered by
the soft North American market and price cuts. Operating margin,
at 21.3%, dipped from 23.9% in the year-ago period.
Petroleum Services & Supplies:
The company's Petroleum Services & Supplies segment achieved
revenues of $1,809.0 million, up 5.4% from the year-ago period,
though operating profit declined 15.4% from the third quarter of
2012 to $324 million. Operating margin was 17.9% versus 22.3% in
the year-ago quarter. The negative comparisons were due to the
slow pace of land drilling purchases.
Distribution & Transmission:
Distribution & Transmission revenues climbed 2.6% year over
year to $1,342.0 million. Operating profit was $78 million, flat
from the year-earlier quarter. The segment results were held up
by contribution from the Robbins & Myers acquisition and
rising international demand. However, operating margin came in at
5.8%, down from 5.9% in the third quarter of 2012 due to changing
Backlog for capital equipment orders for the company's Rig
Technology segment was a record $15,150.0 million at Sep 30,
2013, up 30% from the previous quarter level.
At the end of the third quarter, the company had cash on hand of
$2,741.0 million and debt of $3,749.0 million. The
debt-to-capitalization ratio stood at approximately 14.7%.
Zacks Rank & Stock Picks
NOV, which ranks ahead of
Cameron International Corp.
) as the biggest U.S. maker of oilfield equipment, currently
retains a Zacks Rank #3 (Hold), implying that it is expected to
perform in line with the broader U.S. equity market over the next
one to three months.
Meanwhile, one can look at
Matador Resources Co.
Northern Oil & Gas Inc.
) as good buying opportunities. These domestic upstream energy
operators - sporting a Zacks Rank #1 (Strong Buy) - have solid
secular growth stories with potential to rise significantly from
CAMERON INTL (CAM): Free Stock Analysis
MATADOR RESOURC (MTDR): Free Stock Analysis
NORTHRN OIL&GAS (NOG): Free Stock Analysis
NATL OILWELL VR (NOV): Free Stock Analysis
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