National Oilwell Varco (NOV) versus Its Rivals Critical Review

National Oilwell Varco (NYSE: NOV) is one of 56 public companies in the “Oil Related Services and Equipment” industry, but how does it contrast to its peers? We will compare National Oilwell Varco to similar businesses based on the strength of its earnings, dividends, analyst recommendations, valuation, risk, institutional ownership and profitability.

Dividends

National Oilwell Varco pays an annual dividend of $0.20 per share and has a dividend yield of 0.6%. National Oilwell Varco pays out -3.3% of its earnings in the form of a dividend. As a group, “Oil Related Services and Equipment” companies pay a dividend yield of 2.7% and pay out -46.3% of their earnings in the form of a dividend. National Oilwell Varco lags its peers as a dividend stock, given its lower dividend yield and higher payout ratio.

Earnings & Valuation

This table compares National Oilwell Varco and its peers gross revenue, earnings per share and valuation.

Gross Revenue EBITDA Price/Earnings Ratio
National Oilwell Varco $6.84 billion -$440.00 million -5.88
National Oilwell Varco Competitors $2.00 billion $269.51 million -40.27

National Oilwell Varco has higher revenue, but lower earnings than its peers. National Oilwell Varco is trading at a higher price-to-earnings ratio than its peers, indicating that it is currently more expensive than other companies in its industry.

Institutional & Insider Ownership

90.3% of National Oilwell Varco shares are owned by institutional investors. Comparatively, 65.8% of shares of all “Oil Related Services and Equipment” companies are owned by institutional investors. 0.2% of National Oilwell Varco shares are owned by insiders. Comparatively, 11.9% of shares of all “Oil Related Services and Equipment” companies are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of current ratings and price targets for National Oilwell Varco and its peers, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
National Oilwell Varco 3 14 6 0 2.13
National Oilwell Varco Competitors 500 2214 2930 125 2.46

National Oilwell Varco currently has a consensus target price of $38.32, indicating a potential upside of 7.90%. As a group, “Oil Related Services and Equipment” companies have a potential upside of 26.10%. Given National Oilwell Varco’s peers stronger consensus rating and higher probable upside, analysts plainly believe National Oilwell Varco has less favorable growth aspects than its peers.

Profitability

This table compares National Oilwell Varco and its peers’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
National Oilwell Varco -33.24% -2.12% -1.41%
National Oilwell Varco Competitors -19.40% -18.10% -6.51%

Volatility & Risk

National Oilwell Varco has a beta of 0.99, meaning that its stock price is 1% less volatile than the S&P 500. Comparatively, National Oilwell Varco’s peers have a beta of 1.57, meaning that their average stock price is 57% more volatile than the S&P 500.

Summary

National Oilwell Varco peers beat National Oilwell Varco on 10 of the 14 factors compared.

About National Oilwell Varco

National Oilwell Varco, Inc. is an oilfield equipment manufacturer and technology provider. The Company operates through four segments: Rig Systems, Rig Aftermarket, Wellbore Technologies and Completion & Production Solutions. The Rig Systems segment makes and supports the capital equipment and integrated systems needed to drill oil and gas wells on land and offshore. The Rig Systems segment designs, manufactures and sells land rigs, offshore drilling equipment packages, and drilling rig components. The Rig Aftermarket segment provides aftermarket products and services to support a large installed base of land and offshore rigs, and drilling rig components manufactured by the Company’s Rig Systems segment. The Wellbore Technologies segment designs, manufactures, rents and sells a range of equipment and technologies used to perform drilling operations. The Completion & Production Solutions segment integrates technologies for well completions and oil and gas production.

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