National Oilwell Varco versus peers
On September 6, 2017, National Oilwell Varco (NOV) was trading at $31.83, ~15% lower than its price at the beginning of 2017. The company, which designs, manufactures, and sells equipment and components used in upstream energy production, has had a weak run in the stock market in 2017.
The VanEck Vectors Oil Services ETF (OIH), an ETF tracking an index of 25 oilfield services companies, has fallen 29% year-to-date. Keane Group (FRAC), NOV’s smaller-market-cap peer, has fallen 38%, and West Texas Intermediate (or WTI) crude oil has fallen ~6%. NOV makes up 5.3% of OIH. For more on US crude oil prices, read The US Crude Oil Rise: Short Covering or Bulls Back in Action?
What does NOV’s price movement tell us?
On September 7, 2016, National Oilwell Varco’s stock price started trending upward, and did so up until March 2017. Since then, it has fallen. Despite improved quarterly revenue and cutting losses, National Oilwell Varco has high net debt and a high net-debt-to EBITDA (earnings before interest, tax, depreciation, and amortization) ratio, which have kept its stock price under pressure. In comparison, oilfield equipment and services peer Halliburton (HAL) has seen its stock price fall 26% this year, and Schlumberger’s (SLB) has fallen 22%.
National Oilwell Varco’s moving averages
On September 6, 2017, National Oilwell Varco’s stock price was trading at a 0.5% discount to its 50-day moving average (or DMA). NOV’s stock price fell below its 50-DMA in March 2017, and it is currently trading 11% below its 200-DMA. Breaking above the 50-DMA could hint at a turn in prices.
In this series, we’ll analyze National Oilwell Varco’s growth drivers, balance sheet, and dividends. In the next part, we’ll look at some of the company’s views.