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National Oilwell Varco’s Forward Valuation Multiple Improved

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Nov. 20 2020, Updated 1:28 p.m. ET

National Oilwell Varco’s EV-to-EBITDA trend

As of December 31, 2017, National Oilwell Varco’s (NOV) EV (enterprise value) decreased. The company’s stock price fell marginally compared to a year ago. National Oilwell Varco’s adjusted EBITDA was low in 2017. In 2016, National Oilwell Varco’s EV-to-EBITDA multiple wasn’t meaningful due to its negative EBITDA. Since December 31, 2017, National Oilwell Varco’s stock price has increased marginally until March 9. The company’s EV increased, which led to a rise in its current EV-to-EBITDA multiple.

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Forward EV-to-EBITDA multiple

National Oilwell Varco’s (NOV) forward EV-to-EBITDA multiple (15.5x) is lower than its current EV-to-EBITDA multiple (36.1x). Analysts expect a higher EBITDA for National Oilwell Varco in the next 12 months. National Oilwell Varco’s current EV-to-EBITDA is higher than the average of the OFS companies in the VanEck Vectors Oil Services ETF (OIH). The average EV-to-EBITDA for the companies in OIH is 24.8x.

Forward EV-to-EBITDA comparison

Newpark Resources’ (NR) forward EV-to-EBITDA of 7.4x is at a 38% discount to its current multiple. Halliburton’s (HAL) forward EV-to-EBITDA multiple of 9.2x is at a 32% discount to the current EV-to-EBITDA multiple. To learn more, read How Halliburton’s Strategies Could Affect Returns in 2018.

PE multiple

National Oilwell Varco’s current PE (price-to-earnings) multiple isn’t meaningful due to its negative adjusted earnings. National Oilwell Varco’s forward PE multiple is positive, which reflects sell-side analysts’ estimates of positive earnings in the next 12 months. National Oilwell Varco accounts for 6.4% of the SPDR S&P Oil & Gas Equipment & Services ETF (XES). XES decreased 21% in the past year—compared to no change in National Oilwell Varco’s stock price during the same period.

Next, we’ll discuss Superior Energy Services’ (SPN) valuation multiples.

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