Will National Oilwell Varco’s Returns Rise after 1Q17?



Projects that could affect National Oilwell Varco’s returns

Some of the projects that could affect National Oilwell Varco’s (NOV) returns are as follows:

  • NOV’s project award in the Anadarko Basin, situated in Oklahoma and the Texas Panhandle, is expected to benefit its returns in 1Q17.
  • NOV’s orders provided 75,000 hydraulic horsepower of fracture stimulation pumps and associated support equipment during 4Q16. This activity is expected to boost its returns in 1Q17.
  • NOV acquired Axiom Process in January 2017, and the acquisition is expected to improve NOV’s solids control portfolio.
  • NOV and Maersk Drilling recently entered into a five-year partnership. NOV will provide drilling equipment in seven of Maersk Drilling’s offshore floating rigs.
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What are NOV’s challenges in 2017?

National Oilwell Varco’s management expects the offshore energy market and parts of its international operations to remain challenging in 2017. Its capital equipment sales have been weak due to the downturn in the energy market.

National Oilwell Varco makes up 0.06% of the iShares Russell 1000 ETF (IWB), but for investors looking for exposure to the energy sector, energy makes up 6.3% of IWB.

NOV also makes up 0.07% of the SPDR S&P 500 ETF (SPY). SPY tracks the price and yield performance of the S&P 500 Index (SPX-INDEX). The S&P 500 Index includes 500 top companies. 

The energy sector makes up 6.6% of the SPX-INDEX. The SPX-INDEX has risen 12% in the past year, compared to the 33% rise in NOV’s stock price.

Next, we’ll discuss NOV’s value drivers.


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