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NOV Shares Take a Beating After Downbeat Revenue Outlook

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Shares of NOV Inc. NOV plunged more than 10% on Tuesday after the company lowered its first-quarter 2021 guidance due to weather disturbances and lower-than-expected customer demands.

Clay Williams, chairman, president and CEO said, “Unfortunately, the extreme winter weather across Texas and Oklahoma, the ongoing effects of COVID-19 lockdowns, and the continued spending austerity from our oilfield customers are combining to take a greater-than-expected toll on our first quarter results.”

The Houston, TX-based company’s Rig Technologies unit and the Completion & Production Solutions unit were affected by logistical troubles from coronavirus-induced restrictions in Southeast Asia and postponements in certain projects. Also, shortage in the supply of acute global glass fiber hampered NOV’s fiberglass systems operations. As a result of these headwinds, the company now foresees its first-quarter sales in the $1.20-$1.25 billion range while its adjusted EBITDA loss is anticipated in the $15-$25 million band.

Despite the bleak scenario in the March quarter, Clay Williams believes that the outlook for the remainder of 2021 will be much brighter to compensate for this present drabness. The recovery in crude prices to around $65 a barrel as a result of the recently announced OPEC+ supply curbs until April together with the improvement in drilling operations across North America and the ramp-up in international and offshore markets activity will aid results in the remaining part of the ongoing year.

Meanwhile, the company continues to concentrate on cost-containment measures along with capitalizing on latest products and technologies as it intends to overcome the tough times by maintaining financial flexibility and operational excellence.

It is scheduled to release first-quarter 2021 results on Tuesday Apr 27, after the closing bell. The Zacks Consensus Estimate for the to-be-reported quarter’s loss is 18 cents per share and for revenues is $1.31 billion.

Company Profile

NOV, formerly National Oilwell Varco, is a world leader in designing, manufacturing and selling of comprehensive systems, components, products and equipment used in oil and gas drilling and production worldwide. This energy player rechristened itself since the beginning of this year, which reflects its aim to further expand its scope and scale to enhance economic efficiencies, as well as safety within the energy sector. The company's extensive portfolio of proprietary technologies is intended at lowering the industry's marginal cost per barrel.

Zacks Rank & Key Picks

NOV currently has a Zacks Rank #4 (Sell).

Some better-ranked players in the energy space are Matador Resources Company MTDR, Diamondback Energy, Inc. FANG and Denbury Inc. DEN, each presently flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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