Earnings Preview: National Oilwell Varco - Analyst Blog
January 31 2013 - 12:30PM
Zacks
Global large-cap energy equipment maker National Oilwell
Varco Inc. (NOV) is set to release its fourth-quarter 2012
results before the opening bell tomorrow, Friday, Feb 1.
In the last quarter, it delivered a positive 0.66% earnings
surprise, helped by robust activity levels, as well as good project
execution skills. This represented the six straight quarter of
positive earnings surprise. Let’s see how things are shaping up
prior to this announcement.
Factors to Consider This Quarter
Demand for offshore drilling is again growing rapidly, all
around the world. National Oilwell is ready to grasp this
opportunity by building new rigs and also by upgrading the older
rigs to up-to-date standards and technology.
However, the company derives the major portion of its revenue
from onshore projects, which are prone to geopolitical disturbances
and might result in order delays and cancellations.
Unlike the third quarter, activities of this energy equipment
maker during the final quarter of the year were not enough to win
analysts’ confidence.
Earnings Whispers
Our proven model does not conclusively show that National
Oilwell is likely to beat the Zacks Consensus Estimate in the
fourth quarter. That is because a stock needs to have both a
positive Earnings ESP (Read: Zacks Earnings ESP: A Better Method)
and a Zacks Rank #1 (Strong Buy) or at least Zacks Rank #2 (Buy) or
Zacks Rank #3 (Hold) for this to happen. Unfortunately this is not
the case here as elaborated below.
Negative Zacks ESP: This is because the Most
Accurate estimate stands at $1.43 while the Zacks Consensus is
higher at $1.44. This results in a difference of -0.69%.
Zacks Rank #3 (Hold): National Oilwell’s Zacks
Rank #3 (Hold), however, increases the predictive power of ESP.
That said we also need to have a positive ESP to be confident of an
earnings surprise call.
Other Stocks to Consider
Here are some other companies you may want to consider on the
basis of our model, which shows that they have the right
combination of elements to post an earnings beat this quarter:
Atlas Energy L.P (ATLS), Earnings ESP of
+260.00% and Zacks Rank #1 (Strong Buy).
Northern Tier Energy LP (NTI), Earnings ESP of
+7.97% and Zacks Rank #1 (Strong Buy).
Hercules Offshore Inc. (HERO), Earnings ESP of
+14.29% and Zacks Rank #2 (Buy).
ATLAS ENERGY LP (ATLS): Free Stock Analysis Report
HERCULES OFFSHR (HERO): Free Stock Analysis Report
NATL OILWELL VR (NOV): Free Stock Analysis Report
NORTHERN TIER (NTI): Free Stock Analysis Report
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