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National Oilwell Varco: Why The Market Punished The Stock So Harshly

National Oilwell Varco (NOV) reported its Q4 results last week, beating analysts' estimates by a wide margin (EPS $1.69 vs. expected $1.60). Even better, the company achieved a new all-time high in its quarterly EPS, which is really impressive given that oil has plunged 50% in the last 7 months. However, after an initially positive reaction, the market punished the stock very harshly, sending the stock 10% lower on the next 4 trading days. The big question is whether the current stock price represents a great entry point or there is further downside ahead.

At first sight the earnings report was quite impressive. To be sure, the revenue increased in all 4 segments in Q4, averaging an 8% rise over last year. Moreover, excluding special items related to write-offs, the company achieved record earnings of $721 M or $1.69 per share.

However, the company achieved this remarkable profit with the… Read More …