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National Oilwell Likely to Miss Estimates, Stock Loses 7%


National Oilwell Varco, Inc. NOV slumped 7.2% yesterday after it warned investors that the company's first-quarter 2018 revenues are expected to miss expectations, which will be reported on Apr 26, after the market closes.

The company's revenue prediction of $1.8 billion for the January-March period reflects 3.4% year-over-year decline and is below the Zacks Consensus Estimate of $1.943 billion. Moreover, the company expects all three of its segments to report lower sales sequentially. National Oilwell’s adjusted EBITDA is now anticipated to reach about $160 million.

Additionally, the company expects a GAAP operating loss of around $1 million in the quarter. The Zacks Consensus Estimate for earnings shows a loss of 1 penny per share. Notably, the company’s earnings in the trailing four quarters did not miss the consensus estimate.

Reasons for Downward Revision

The company blamed new offshore rig construction's lowered progress as well as client-associated equipment deferrals for decline in its revenues. The delay from customers is expected to push the remaining revenues to later quarters. Moreover, the sequential shipments of subsea production equipment declined during the end of the quarter, hurting National Oilwell's top line in the period.

National Oilwell is still optimistic about the remaining quarters of the year as it expects the improving energy market to reflect positively on the company's results in the coming quarters. Rising oil prices and rig count in the United States are expected to hike demand for its services.

Price Performance

National Oilwell has gained 1.1% in the past year against the 14.7% fall of its industry.

Zacks Rank and Stocks to Consider

National Oilwell carries a Zacks Rank #3 (Hold). If you are interested in the oil and energy sector, you can opt for better-ranked stocks like CNOOC Limited CEO, Oasis Midstream Partners LP OMP and Continental Resources, Inc. CLR. While CNOOC sports a Zacks Rank #1 (Strong Buy), Oasis Midstream and Continental Resources hold a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Hong Kong-based CNOOC is an integrated energy company. Its revenues for 2018 are anticipated to improve 51.3% year over year, while its bottom line is expected to increase 80.8%.

Houston, TX-based Oasis Midstream is an integrated energy partnership. Its revenues for 2018 are anticipated to improve 29.3% from the prior-year quarter, while its bottom line is expected to increase 337.2%.

Oklahoma City, OK-based Continental Resources is an oil and gas exploration and production company. Its revenues for first-quarter 2018 are estimated to soar 55.7% from the year-ago quarter’s figure. For 2018, the bottom line is likely to be up 376.5%.

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