NOV Inc. Common Stock (NOV) fair value

ACCE thesis

NOV Inc. makes the drilling equipment, rig components and well-completion tools that oilfield operators buy when they build or service wells, and it sells a large aftermarket of parts and services to keep the existing fleet running. Its structural case rests on that installed base, since rig owners and drillers must keep buying replacement parts and upgrades regardless of the short-term rig count, which gives it a steadier revenue stream than the drilling cycle alone would suggest. The stock looks inexpensive on forward earnings at 15.6x against a trailing 69.0x, a gap that signals earnings are expected to recover sharply from a depressed base rather than that the business is cheap on current profit. Against that, revenue fell 2.5%, return on equity is only 1.6% and operating margin of 7.2% leaves little cushion, so the recovery has to materialise before the valuation case holds up. The score of 47/100 and absence from any index mean this warrants a closer look at backlog, margin trajectory and free cash flow before it earns a place in the book.