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National-Oilwell Varco, Inc. (NOV): What’s The Growth Looking Like?

On Friday, National-Oilwell Varco, Inc. (NYSE:NOV) will release its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings is to anticipate how they’ll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you’ll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

National Oilwell Varco has become a vital go-to provider of vital materials for the energy industry, with products ranging from drilling pipe to full rigs and derricks. Yet with energy prices having been weak lately, production activity has slowed, putting pressure on the company. Let’s take an early look at what’s been happening with National-Oilwell Varco, Inc. (NYSE:NOV) over the past quarter and what we’re likely to see in its quarterly report.

Stats on National Oilwell Varco

Analyst EPS Estimate $1.36
Change From Year-Ago EPS (5.6%)
Revenue Estimate $5.38 billion
Change From Year-Ago Revenue 25%
Earnings Beats in Past 4 Quarters 4

Source: Yahoo! Finance.

Will National Oilwell Varco keep on growing this quarter?
In recent months, analysts have cut their views on Varco’s earnings substantially, with a $0.14 per share drop for the just-ended quarter and a more than $0.50 per share decline in expectations for the full 2013 year. The stock has also suffered from the pessimism, falling nearly 8% since mid-January.

National-Oilwell Varco, Inc. (NYSE:NOV) has continued to capitalize on being a one-stop shop for exploration and production companies of all sizes, providing the materials that producers need in order to find and extract oil and gas from their wells. Varco’s solid business model even attracted the attention of Warren Buffett, who started buying the stock last year and who added further positions during the past quarter.

The concern that many investors have about Varco is that drilling activity has been on the decline, especially onshore. Yet recent results from Varco’s competitors seem to make those fears seem overblown. Halliburton Company (NYSE:HAL), which concentrates on domestic drilling, saw North American revenue drop sequentially in its most recent quarter, but rig counts were down just 3%. Moreover, with natural gas prices having risen recently, it’s entirely possible that growth will return on the gas side of the business, propelling further growth.

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