What Are NOV’s Challenges and Opportunities in 2Q17?



NOV’s challenges

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National Oilwell Varco’s outlook for 2Q17

  • Rig Aftermarket segment revenues are expected to rise marginally over 1Q17.
  • Rig Systems segment revenues are expected to fall 5% to 10% in 2Q17 over 1Q17.
  • The Rig Systems segment’s decremental margins could hover in the 20%–30% range.
  • The Completions & Production Solutions segment revenues are expected to exceed 1Q17’s revenues.
  • The Wellbore Technologies segment revenue is expected to rise 5%–7% over 1Q17.

How is NOV’s order backlog doing in 2017?

National Oilwell Varco’s management said that much of its orders backlog consists of onshore-based equipment. In the 1Q17 earnings conference call, Jose Bayardo, NOV’s chief financial officer, commented, “Included in our land order book were orders for 30 high-spec well-servicing rigs for the U.S. market, several TDS-11SA Top Drive and a stand transfer vehicle, which automates the most difficult and dangerous pipe handling requirements, and eliminates the need for a derrick man on top of the derrick. We also booked 16 orders for our NOVOS rig operating systems, the centerpiece of our automation offering.”

National Oilwell Varco makes up 0.06% of the iShares Russell 1000 ETF (IWB). NOV also makes up 0.06% of the SPDR S&P 500 ETF (SPY). SPY tracks the price and yield performance of the S&P 500 Index (SPX-INDEX). The SPX-INDEX rose 13% in the past one year versus a 2% fall in NOV’s stock price.

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


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