Is National Oilwell Varco’s Stock Looking Weak?

National Oilwell Varco versus industry ETF

National Oilwell Varco (NOV) is one of the largest US oilfield equipment and service (or OFS) providers by market capitalization. Its stock has declined sharply in 2015. On December 18, NOV was trading at $33.27. This was ~49% lower than its price at the beginning of this year.

The VanEck Vectors Oil Services ETF (OIH), an ETF tracking an index of 25 OFS companies, has declined 27% during the same period. FMC Technologies (FTI), NOV’s smaller market cap peer, has fallen 39% since January 1. Compared to NOV’s $12.5 billion market capitalization, FTI’s market capitalization stands at ~$6.5 billion. NOV makes up 4.7% of OIH. NOV’s market performance reflects the entire OFS industry’s performance, which has been negatively affected by the energy price crash since June 2014.

Is National Oilwell Varco’s Stock Looking Weak?

What does NOV’s share price movement tell us?

Since the beginning of this year, NOV’s share price was the highest on January 2. Since then, it’s been a story of downfall, except for a temporary recovery during April. NOV released its fiscal 1Q15 results in late April. NOV’s revenues and net income sharply deteriorated in fiscal 1Q15 compared to 1Q14. Following the result, its share price started sliding down again, and has continued to fall until now. Plus, NOV’s top-line and bottom-line performances have suffered in all three quarters until fiscal 3Q15.

NOV’s moving averages

On December 18, NOV’s share price was at an 11% discount to its 50-day moving average. It is also trading 25% below its 200-day moving average. NOV’s stock currently faces the 50-day moving average at $37 as a short-term upside resistance. Its 200-day moving average is currently at $44.

Moving averages exhibit a smoother trend following the stock’s price movement. A 50-day moving average is a short-term moving average while a 200-day moving average shows a long-term trend. Throughout the year, NOV’s stock price has been consistently below the short-run moving average. The short-run moving average has in turn been consistently below the long-run moving average. This indicates the bearishness in NOV’s share price.

Next, we will discuss what NOV’s management anticipates for its outlook as well as the Wall Street analysts’ target prices for NOV.