NOV - Embedded Expectations Analysis - 2019 02 18
National Oilwell Varco, Inc. (NOV:USA) currently trades at historical lows relative to UAFRS-based (Uniform) Assets, with a 1.3x Uniform P/B. At these levels the market has fairly limited expectations, pricing in expectations for the firm to see Uniform ROA remain well below historical averages going forward. Although management has concerns about demand headwinds, customer orders, revenue growth, and margins, overly bearish market expectations suggest long-term outperformance remains warranted should NOV return to historically average profitability levelsSpecifically, management may lack confidence in their ability to sustain growth, and might be overstating their ability to improve ROIC. Furthermore, they may be concerned about demand, and may be overstating the production and cost-saving capabilities of their technologies. In addition, they may be exaggerating the growth potential of various programs.
That said, despite potential near-term headwinds, valuations support long-term outperformance should NOV just return to historical profitability levels going forward
National Oilwell Varco is an independent provider of equipment and technology to the upstream oil and gas industry. The company's segments include: Wellbore Technologies, which designs, manufactures, rents, and sells a variety of equipment and technologies used to perform drilling operations; Completion and Production Solutions, which designs, manufactures, and sells equipment and technologies for hydraulic fracture stimulation, well intervention, onshore production, and offshore production; and Rig Technologies, which designs, manufactures and sells land rigs, offshore drilling equipment packages, and drilling rig components that mechanize and automate the drilling process and rig functionality.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.