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.
Segmental Performance
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
National Oilwell Varco, Inc. price-consensus-eps-surprise-chart
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National Oilwell Varco, Inc. Quote
Backlog
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.
Balance Sheet
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%.
Outlook
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
.
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