Nov Inc. (NOV) Down 12.2% Since Last Earnings Report: Can It Rebound?

·4 min read

A month has gone by since the last earnings report for Nov Inc. (NOV). Shares have lost about 12.2% in that time frame, underperforming 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 the most recent earnings report in order to get a better handle on the important catalysts.

NOV Reports Q3 Loss Wider Than Expected

NOV reported an adjusted loss of 11 cents per share for third-quarter 2021, wider than the Zacks Consensus Estimate of a loss of 8 cents and the year-ago quarter’s loss of 1 cent. This downside could be due to the ongoing logistics challenges and cost inflation. Worse-than-expected sales from the Rig Technologies and the Completion & Production Solutions segments also proved to be headwinds.

Total revenues of $1.34 billion missed the Zacks Consensus Estimate by 5.24%. Moreover, the top line dipped 2.9% from the year-ago number of $1.38 billion.

Segmental Performances

Rig Technologies:  Revenues of $390 million missed the Zacks Consensus Estimate of $420 million and compared unfavorably with the year-ago quarter’s $449 million. This downside was due to the revenue gain made in the second quarter over the third through the receipt of $74 million, which was associated with the final settlement following the cancellation of offshore rig contracts. The unit’s adjusted EBITDA of $25 million outpaced the Zacks Consensus Estimate of $14.07 million but decreased from the year-earlier quarter’s $28 million.

Wellbore Technologies:  Segmental revenues of $507 million outpaced the Zacks Consensus Estimate of $500 million and compared favorably with the year-ago quarter’s $361 million on the back of increased oil and gas drilling activity levels and gains in market share from some markets as well as higher pricing. The unit’s adjusted EBITDA of $77 million surpassed the Zacks Consensus Estimate of $72 million and exceeded the year-earlier quarter’s $21 million.

Completion & Production Solutions:  Revenues of $478 million missed the Zacks Consensus Estimate of $532 million and also dropped 20.5% from $601 million in the year-earlier quarter. This downside could be attributed to coronavirus-triggered constraints. The unit recorded a negative adjusted EBITDA of $5 million against the year-ago quarter’s figure of $63 million. However, the Zacks Consensus Estimate was an adjusted EBITDA of $15.90 million.

Backlog

Capital equipment order backlog for Rig Technologies was $2.78 billion as of Sep 30, 2021 including $300 million worth of new orders.

The Completion & Production Solutions’ backlog for capital equipment orders totalled $1.11 billion at the end of the third quarter comprising $384 million of new orders.

Balance Sheet

As of Sep 30, 2021, the company had cash and cash equivalents of $1.67 billion and a long-term debt of $1.7 billion. The total debt-to-total capitalization was 25.1%. The company has $2 billion available under its revolving credit facility.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month. The consensus estimate has shifted -13.96% due to these changes.

VGM Scores

Currently, Nov Inc. has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Nov Inc. has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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