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National Oilwell Varco (NOV): What's Up in Q4 Earnings?
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Houston, TX-based energy equipment manufacturer National Oilwell Varco Inc. (NOV - Free Report) is expected to release fourth-quarter 2016 financial results on Feb 7, before the opening bell.
Last quarter, the company posted a negative earnings surprise of 21.43%. Moreover, National Oilwell had an average negative earnings surprise of 6.01% in the last four quarters. Let’s see how things are shaping up for this announcement.
Factors Likely to Influence This Quarter
National Oilwell Varco is one of the biggest manufacturers of drilling equipment in the world with an impressive business model. The company’s large installed base of rigs worldwide provides it a steady recurring revenue stream through demand for maintenance, parts and other expendable products. This should have a positive impact on the fourth-quarter results as well.
National Oilwell Varco, Inc. Price, Consensus and EPS Surprise
We appreciate the drilling equipment maker’s cost-reduction efforts and its large installed base of worldwide rigs that ensure steady revenue generation. Moreover, the recent OPEC deal and the subsequent advancement of crude oil has prompted producers to revive spending on drilling activities. This is expected to spur rig count, in turn, boosting income for the company.
However, the ongoing weakness in commodity prices – despite the recent OPEC-driven recovery – has curtailed energy drilling and equipment demand, thereby affecting the company’s revenues, earnings and cash flow.
Earnings Whispers
Our proven model does not conclusively show that National Oilwell is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESPand a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, this is not the case here as elaborated below.
Zacks ESP: The company currently has an Earnings ESP of -6.90%. This is because the Most Accurate estimate is pegged at a loss of 31 cents and the Zacks Consensus Estimate stands at a loss of 29 cents per share.
Zacks Rank: National Oilwell carries a Zacks Rank #3, which increases the predictive power of ESP. However, a negative ESP makes surprise prediction difficult.
The Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies from the energy space that, according to our model, have the right combination of elements to post an earnings beat this quarter.
Sprague Resources LP has an Earnings ESP of +3.64% and a Zacks Rank #2. The partnership is anticipated to release fourth-quarter earnings around Mar 9.
Pioneer Natural Resources Company has an Earnings ESP of +10.00% and a Zacks Rank #2. The company is likely to release fourth-quarter earnings around Feb 7.
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National Oilwell Varco (NOV): What's Up in Q4 Earnings?
Houston, TX-based energy equipment manufacturer National Oilwell Varco Inc. (NOV - Free Report) is expected to release fourth-quarter 2016 financial results on Feb 7, before the opening bell.
Last quarter, the company posted a negative earnings surprise of 21.43%. Moreover, National Oilwell had an average negative earnings surprise of 6.01% in the last four quarters. Let’s see how things are shaping up for this announcement.
Factors Likely to Influence This Quarter
National Oilwell Varco is one of the biggest manufacturers of drilling equipment in the world with an impressive business model. The company’s large installed base of rigs worldwide provides it a steady recurring revenue stream through demand for maintenance, parts and other expendable products. This should have a positive impact on the fourth-quarter results as well.
National Oilwell Varco, Inc. Price, Consensus and EPS Surprise
National Oilwell Varco, Inc. Price, Consensus and EPS Surprise | National Oilwell Varco, Inc. Quote
We appreciate the drilling equipment maker’s cost-reduction efforts and its large installed base of worldwide rigs that ensure steady revenue generation. Moreover, the recent OPEC deal and the subsequent advancement of crude oil has prompted producers to revive spending on drilling activities. This is expected to spur rig count, in turn, boosting income for the company.
However, the ongoing weakness in commodity prices – despite the recent OPEC-driven recovery – has curtailed energy drilling and equipment demand, thereby affecting the company’s revenues, earnings and cash flow.
Earnings Whispers
Our proven model does not conclusively show that National Oilwell is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESPand a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, this is not the case here as elaborated below.
Zacks ESP: The company currently has an Earnings ESP of -6.90%. This is because the Most Accurate estimate is pegged at a loss of 31 cents and the Zacks Consensus Estimate stands at a loss of 29 cents per share.
Zacks Rank: National Oilwell carries a Zacks Rank #3, which increases the predictive power of ESP. However, a negative ESP makes surprise prediction difficult.
The Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies from the energy space that, according to our model, have the right combination of elements to post an earnings beat this quarter.
W&T Offshore, Inc. (WTI - Free Report) is expected to release fourth-quarter earnings results around Mar 14. The company has an Earnings ESP of +73.91% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Sprague Resources LP has an Earnings ESP of +3.64% and a Zacks Rank #2. The partnership is anticipated to release fourth-quarter earnings around Mar 9.
Pioneer Natural Resources Company has an Earnings ESP of +10.00% and a Zacks Rank #2. The company is likely to release fourth-quarter earnings around Feb 7.
Zacks’ Best Private Investment Ideas
In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time? Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>