Global large-cap energy equipment maker National Oilwell Varco Inc. (NOV) reported strong first quarter earnings, buoyed by rising domestic as well as international demand. Earnings per share (excluding transaction costs) came in at $1.40, above the Zacks Consensus Estimate of $1.39 and the year-ago adjusted profit of $1.29 per share.
Quarterly revenue jumped 8.9% year over year – from $5,307.0 million to $5,777.0 million – but was short of the Zacks Consensus Estimate of $5,793.0 million. .
Segmental Performance
Rig Technology: Revenue in the Rig Technology segment increased 14.5% year over year to $3,009.0 million, while revenue out of backlog was 2,220.0 million. Moreover, the segment’s operating profit was up significantly (by 14.0% year over year) to $635.0 million. Rig Technology’s profitability during the quarter was buoyed by the strong demand for oilfield equipment. Operating margin, at 21.1%, was almost in line with 21.2% in the year-ago period.
Petroleum Services & Supplies: The company’s Petroleum Services & Supplies segment achieved revenues of $1,789.0 million, up 5.2% from the year-ago period, while operating profit improved 4.8% from the first quarter of 2013 to $326 million. Operating margin was 18.2%, essentially flat from the year-ago quarter. The positive comparisons were due to the rapid pace of land drilling purchases.
Distribution & Transmission: Distribution & Transmission revenues climbed 4.4% year over year to $1,281.0 million. Operating profit was $68 million, up $3 million from the year-earlier quarter. The segment results were held up by contribution from the Robbins & Myers acquisition and rising international demand. Operating margin came in at 5.3%, same as the one achieved in the first quarter of 2013.
Backlog
Backlog for capital equipment orders for the company’s Rig Technology segment was a record $16,350.0 million at Mar 31, 2014, up 27% from the corresponding period last year.
Balance Sheet
At the end of the first quarter, the company had cash on hand of $3,688.0 million and long-term debt of $3,149.0 million. The debt-to-capitalization ratio stood at approximately 12.1%.
Zacks Rank & Stock Picks
NOV, which ranks ahead of Cameron International Corp. (CAM) as the biggest U.S. maker of oilfield equipment, currently retains a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.
Meanwhile, one can look at Range Resources Corp. (RRC) and Clayton Williams Energy Inc. (CWEI) as good buying opportunities. These domestic upstream energy operators – sporting a Zacks Rank #1 (Strong Buy) – have solid secular growth stories with potential to rise significantly from current levels.
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment