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Things You Must Consider Ahead of NOV's Q2 Earnings Report

NOV Inc. NOV is set to release second-quarter 2021 results on Tuesday Jul 27, after the closing bell. The current Zacks Consensus Estimate for the to-be-reported quarter is pegged at a loss of 13 cents per share while the same for revenues stands at $1.37 billion.

Let’s delve deeper into the factors that might have impacted this oilfield services company’s performance in the June quarter. But it’s worth taking a look at NOV’s previous-quarter results first.

Highlights of Q1 Earnings & Surprise History

This Houston, TX-based provider of equipment and technology to the oil and gas exploration and production firms reported an adjusted loss of 28 cents per share for first-quarter 2021, wider than the Zacks Consensus Estimate of a loss of 23 cents. However, the year-ago bottom line was a profit of 14 cents per share. This downside could be attributed to weakness in the Completion & Production Solutions units as a result of weather disturbances, logistical troubles from coronavirus-induced restrictions in Southeast Asia and postponements of certain projects.

Total revenues of $1.25 billion outpaced the Zacks Consensus Estimate by 1.56% on the back of better-than-expected sales from the Rig Technologies and the Wellbore Technologies segments. However, the top line plunged 33.5% from the year-ago number of $1.88 billion.

As far as earnings surprises are concerned, NOV’s bottom line beat the Zacks Consensus Estimate in two of the last four quarters and missed the same on the remaining two occasions, witnessing a negative surprise of 36.62%, on average. This is depicted in the graph below:

NOV Inc. Price and EPS Surprise

NOV Inc. price-eps-surprise | NOV Inc. Quote

Factors to Consider

NOV anticipates its Wellbore Technologies segment activity in the United States and Latin America to slow down in the second quarter while its operations in the Eastern Hemisphere are likely to rebound, resulting in sequential revenue growth of 8-10%. The Zacks Consensus Estimate for Wellbore Technologies’ second-quarter adjusted EBITDA is pegged at $52 million, indicating an increase of 23.8% from the year-ago quarter’s reported figure.

The firm predicts the segment's cost structure to improve and pricing to better, thus allowing incremental EBITDA margins to approach 50%.

In the last reported quarter, the company’s Rig Technologies unit and the Completion & Production Solutions unit were affected by logistical troubles from coronavirus-induced restrictions in Southeast Asia and postponements of certain projects. This, in turn, hurt the quarterly performance of its Rig Technologies unit and Completion & Production Solutions unit. The trend is likely to have continued in the second quarter as well.

Consequently, the Zacks Consensus Estimate for the second-quarter adjusted EBITDA of Rig Technologies and Completion & Production Solutions units is pegged at $13.69 million and $18.66 million, respectively, indicating a decrease of 2.2% and 72.6% each from the corresponding year-ago quarter’s reported figures.

What Does Our Model Say?

The proven Zacks model does not conclusively predict an earnings beat for NOV this time around. The combination of a positive  Earnings ESP  and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. But that’s not the case here.

You can uncover the best stocks to buy or sell before they’re reported with our  Earnings ESP Filter.

Earnings ESP:  NOV has an Earnings ESP of 0.00%. This is because the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at a loss of 13 cents per share each.

Zacks Rank:  NOV has a Zacks Rank #3, currently.

Stocks to Consider

While an earnings beat looks uncertain for NOV, here are some firms from the  energy   space that you may want to consider on the basis of our model:

Ovintiv Inc.  OVV has an Earnings ESP of +14.49% and a Zacks Rank of 1, currently. The firm is scheduled to release earnings on Jul 27. You can see  the complete list of today’s Zacks #1 Rank stocks here.

Range Resources Corporation  RRC has an Earnings ESP of +3.51% and is Zacks #1 Ranked, presently. The firm is scheduled to release earnings on Jul 26.

Murphy USA Inc. MUSA has an Earnings ESP of +12.58% and is Zacks #3 Ranked at present. The firm is scheduled to release earnings on Jul 28.

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Range Resources Corporation (RRC): Free Stock Analysis Report
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