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Did National Oilwell Varco’s 1Q17 Earnings Beat Estimates?

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National Oilwell Varco’s 1Q17 revenue

National Oilwell Varco (NOV) released its 1Q17 financial results on April 26, 2017. The company recorded total revenues of ~$1.7 billion in 1Q17, which was 20.5% lower than the ~$2.2 billion it recorded in 1Q16. As compared to 4Q16, however, National Oilwell Varco’s revenues were resilient, increasing ~3% quarter-over-quarter in 1Q17, with improved revenues in its Completion & Production Solutions segment partially offsetting the lower revenues in NOV’s other operating segments.

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By comparison, 1Q17 revenues for Baker Hughes (BHI), NOV’s larger market cap peer, fell 6% over 4Q16, while Halliburton’s (HAL) revenues increased 6.4% during the same period. (You can read about Halliburton’s 1Q17 earnings in Market Realist’s series Halliburton Releases 1Q17 Earnings: Revenues and Earnings Rise.)

National Oilwell Varco’s 1Q17 earnings

The 1Q17 adjusted net EPS (earnings per share) for National Oilwell Varco is -$0.17, beating the consensus sell-side analysts’ EPS estimate of -$0.21. Higher operating profits in the Completion & Production Solutions segment in 1Q17 pushed NOV’s adjusted earnings above analysts’ estimates.

NOV’s adjusted loss deteriorated in 1Q17 as compared to 1Q16. On average, its adjusted EPS has exceeded consensus EPS by ~6% in the past 13 quarters.

Notably, National Oilwell Varco makes up 5.3% of the VanEck Vectors Oil Services ETF (OIH), an ETF tracking an index of 25 OFS (oilfield equipment and services) companies.

What affected NOV’s reported earnings in 1Q17?

In 1Q17, NOV’s reported net loss was ~$122 million—a marginal deterioration compared to 1Q16, when NOV reported $119 million net loss. As compared to 4Q16, however, National Oilwell Varco’s net loss improved significantly. NOV’s 1Q17 net earnings were affected primarily by $27 million severance, inventory charges, facility closures, and other charges amounting to $694 million in 4Q16.

Next, we’ll discuss NOV’s growth drivers and operating income.

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