A month has gone by since the last earnings report for Nov Inc. (NOV). Shares have lost about 2.1% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Nov Inc. due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
NOV Inc. Earnings & Revenues Beat Estimates in Q4
NOV Inc. posted fourth-quarter net income of 26 cents per share, which was 3 cents better than the Zacks Consensus Estimate and marked a turnaround from the year-ago loss of 6 cents. The outperformance reflects improving momentum in international markets.
NOV’s total revenues of $2.1 billion surpassed the Zacks Consensus Estimate by 6.5% and rose 36.7% from the year-ago sales of $1.5 billion.
Rig Technologies: The unit produced $620 million in fourth-quarter revenues, which comfortably went past the Zacks Consensus Estimate of $550 million and also compared favorably with the year-ago quarter’s $431 million. Adjusted EBITDA of $88 million outpaced the Zacks Consensus Estimate of $62 million and more than quadrupled from the fourth-quarter 2021 figure of $21 million. The segment’s results were buoyed by strong aftermarket operations in tandem with the recovery in global supply chains, plus higher capital equipment deliveries.
Wellbore Technologies: NOV’s Wellbore Technologies segment’s revenues of $762 million increased 32.3% year over year in the fourth quarter of 2022 but fell marginally short of the consensus mark (by 0.8%). While the unit’s adjusted EBITDA of $146 million was up 65.9% from the year-earlier quarter’s profit of $88 million, the same missed the Zacks Consensus Estimate of $162 million. The mixed comparisons could be attributed to solid improvements in the international markets, offset by plateauing North America results, the delayed shipments of drill pipe and motors, plus the related cost escalation to speed up client orders.
Completion & Production Solutions: Compared to a year ago, the segment’s revenues improved 34.4% to $738 million and beat the Zacks Consensus Estimate of $684 million. Moreover, the unit’s adjusted EBITDA of $66 million skyrocketed from the year-ago quarter’s income of $2 million and came well ahead of the consensus mark of $50 million, primarily due to elevated completion equipment demand, improved response to the supply chain-reply issues, better pricing and the segment’s growing backlog of offshore projects.
At the end of 2022, NOV’s capital equipment order backlog for Rig Technologies was $2.79 billion, including $254 million worth of new orders. The company’s Completion & Production Solutions operations currently have a $1.6 billion backlog, comprising $557 million of new orders.
As of Dec 31, 2022, the company had cash and cash equivalents of $1.1 billion and long-term debt of $1.7 billion, with a debt-to-capitalization of 25.1%.
NOV, which budgeted a capital spending of $275 million this year, remains optimistic about the improving outlook for international and offshore markets in particular. As a result, the company's longer-cycle business orders will likely perk up in 2023 and beyond. Agreed, the current weakness in North American natural gas prices and recession-related headwinds might hinder oilfield activity. However, years of underinvestment and the focus on demand for capacity expansion across oil and gas plays, should stand players like NOV in good stead.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month.
Currently, Nov Inc. has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Nov Inc. has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Nov Inc. is part of the Zacks Technology Services industry. Over the past month, Aptiv PLC (APTV), a stock from the same industry, has gained 0.6%. The company reported its results for the quarter ended December 2022 more than a month ago.
Aptiv PLC reported revenues of $4.64 billion in the last reported quarter, representing a year-over-year change of +12.2%. EPS of $1.27 for the same period compares with $0.56 a year ago.
For the current quarter, Aptiv PLC is expected to post earnings of $0.91 per share, indicating a change of +44.4% from the year-ago quarter. The Zacks Consensus Estimate has changed -7% over the last 30 days.
Aptiv PLC has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.
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