National Oilwell (NOV) Posts Narrower-Than-Expected Q3 Loss
National Oilwell Varco, Inc. NOV reported adjusted loss of 1 cent per share for third-quarter 2020, narrower than the Zacks Consensus Estimate of a loss of 9 cents. Moreover, the bottom line improved from the year-ago loss of 61 cents. Particularly, better-than-expected revenues from the Completion & Production Solutions segment led to this outperformance.
Total revenues of $1.38 billion outperformed the Zacks Consensus Estimate of $1.37 billion. However, the top line plunged 34.9% from the year-ago number of $2.13 billion due to weakness in the Rig Technologies and the Wellbore Technologies unit.
Rig Technologies: Revenues summed $449 million, which missed the Zacks Consensus Estimate of $451 million and also compared unfavorably with the year-ago quarter’s $647 million, thanks to a drop in rig capital equipment sales and depressed aftermarket revenues. The unit’s adjusted EBITDA of $28 million decreased from the year-earlier quarter’s $105 million.
Wellbore Technologies: Segmental revenues of $361 million lagged the Zacks Consensus Estimate of $364 million and also fell 54.5% year over year as a result of reduced drilling operations in North America. Meanwhile, the unit’s adjusted EBITDA of $21 million deteriorated from the prior-year’s $133 million.
Completion & Production Solutions: Revenues of $601 million outperformed the Zacks Consensus Estimate of $590 million but dropped 17.44% from $728 million in the year-earlier quarter. This upside could be attributed to dwindling situations in the shorter-cycle businesses, partially offset by a strong execution of the existing backlog. The unit recorded adjusted EBITDA of $63 million, down from the year-ago figure of $82 million.
National Oilwell Varco, Inc. Price, Consensus and EPS Surprise
Capital equipment order backlog for Rig Technologies was $2.66 billion as of Sep 30, 2020 including $57 million worth of new orders.
Meanwhile, the Completion & Production Solutions’ backlog for capital equipment orders totalled $789 million at the end of the third quarter. The figure included $169 million of new orders.
As of Sep 30, 2020, the company had cash and cash equivalents of $1.49 billion and long-term debt of $1.82 billion. The total debt-to-total capitalization was 24.8%.
Despite soft bookings in the third quarter and tough market conditions, the company is witnessing a few signs of hope in the market. The drilling activity in North America is expected to pick up fairly from the current lows. Further, the international markets see lesser coronavirus-related logistical disruptions. Hence, both the company’s Rig Technologies and Completion & Production Solutions segments saw significant ramp-ups in tendering activity, hinting at the possibility of a higher order intake in the fourth quarter.
Zacks Rank & Key Picks
National Oilwell carries a Zacks Rank #3 (Hold), currently. Some better-ranked players in the energy space are Cabot Oil Gas Corporation COG, Oasis Petroleum Inc OASPQ and Earthstone Energy, Inc. ESTE, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.5% per year.
These 7 were selected because of their superior potential for immediate breakout.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
National Oilwell Varco, Inc. (NOV): Free Stock Analysis Report
Cabot Oil Gas Corporation (COG): Free Stock Analysis Report
Earthstone Energy, Inc. (ESTE): Free Stock Analysis Report
Oasis Petroleum Inc. (OASPQ): Free Stock Analysis Report
To read this article on Zacks.com click here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.