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Actionable news in NOV: NATIONAL OILWELL VARCO Inc,

National Oilwell Varco - Bulls' Worst Nightmare Has Been Confirmed


National Oilwell cut its dividend by 89%.

NOV is smart to preserve its $2.1B cash balance but the dividend cut removes an important catalyst for the stock.

Management expects Q1 revenue to fall 20% Q/Q. If oil & gas E&P remains low NOV's liquidity could fall further.

NOV remains 35% above my $18 price target. Avoid the stock.

Source: Barron's

National Oilwell Varco's (NYSE:NOV) revenue and earnings have been ravaged by the rout in oil prices. To stem cash burn the company announced it was cutting its dividend by 89% from $0.46 to $0.05 per share:

National Oilwell Varco, Inc. announced today that its Board of Directors has approved a plan to reduce the Company's quarterly dividend to $0.05 per share in response to market conditions which continued to deteriorate through the first quarter of 2016.

Clay Williams, Chairman, President and CEO, commented, "We believe reducing the dividend is in the best interest of our company and our shareholders as we continue to work our way toward the bottom of this severe down cycle. Substantial decreases in 2016 E&P capital plans are driving activity levels to new record lows, resulting in significantly diminished demand for equipment and services.

Management highlighted that the free fall in the oil & gas E&P warranted the dividend cut. The...