Value
6.6/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 1.4 |
| P/S | 9.8 |
| EV/EBITDA | 7.0 |
| Fwd P/E | 8.4 |
| PEG | 6.5 |
| Analyst target | 6.0 |
- ▸Forward P/E: 13.7x
- ▸PEG: 1.12
NOV · Why this verdict
Why NOV (NOV) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score4.2/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
NOV converts 853% of net income into free cash flow, an extraordinary ratio that indicates reported earnings significantly understate the company's actual cash generation capacity, likely due to non-cash depreciation charges on its capital-intensive equipment business. Quality breakdown | Free cash flow as a percentage of net income remains above 400% over the next 12 months, confirming sustained superior cash generation. | →Stable |
| CounterExtremely high free cash flow relative to net income in oilfield equipment companies often reflects deferred maintenance capital spending rather than structural cash generation strength, and may normalize when the company reinvests. | ||
With a quality score of 3.7 below the 4.0 minimum and no competitive moat, NOV's fundamental business quality does not meet the standard required for a new position regardless of valuation, reflecting weak returns and limited defensibility in a commodity-driven services market. Warnings | Quality score improves above 4.0 within 12 months through sustained margin recovery and improved operational performance. | →Stable |
| CounterAn oilfield equipment business with a strong current-ratio and ample liquidity may weather the current earnings trough, and the 15% short interest could create a squeeze opportunity if energy capex recovers. | ||
NOV missed earnings estimates in 2 of the last 4 quarters, including a significant miss of negative 64.7% in the most recent quarter where actual EPS of $0.05 compared to an estimate of $0.14, suggesting deteriorating profitability in the near term. Earnings | NOV returns to beating or meeting earnings estimates in at least 2 of the next 3 quarters. | →Stable |
| CounterOilfield equipment earnings can be volatile quarter-to-quarter based on order timing, and the most recent beat of 16% in the year-ago quarter shows the company can outperform when conditions are favorable. | ||
The current price of $20.52 is approximately 4.8% above the analyst consensus price target, meaning analysts as a group believe the stock is already overpriced at current levels, with essentially no upside modeled. Bear case | Analyst consensus price target is revised above $22 within 6 months on improved earnings visibility. | →Stable |
| CounterThe stock is trading near its 52-week high with strong technical positioning and volume accumulation, suggesting momentum may carry it higher than analyst targets near-term. | ||
NOV converts 853% of net income into free cash flow, an extraordinary ratio that indicates reported earnings significantly understate the company's actual cash generation capacity, likely due to non-cash depreciation charges on its capital-intensive equipment business.
→StableQuality breakdown
- Expectation
- Free cash flow as a percentage of net income remains above 400% over the next 12 months, confirming sustained superior cash generation.
CounterExtremely high free cash flow relative to net income in oilfield equipment companies often reflects deferred maintenance capital spending rather than structural cash generation strength, and may normalize when the company reinvests.
With a quality score of 3.7 below the 4.0 minimum and no competitive moat, NOV's fundamental business quality does not meet the standard required for a new position regardless of valuation, reflecting weak returns and limited defensibility in a commodity-driven services market.
→StableWarnings
- Expectation
- Quality score improves above 4.0 within 12 months through sustained margin recovery and improved operational performance.
CounterAn oilfield equipment business with a strong current-ratio and ample liquidity may weather the current earnings trough, and the 15% short interest could create a squeeze opportunity if energy capex recovers.
NOV missed earnings estimates in 2 of the last 4 quarters, including a significant miss of negative 64.7% in the most recent quarter where actual EPS of $0.05 compared to an estimate of $0.14, suggesting deteriorating profitability in the near term.
→StableEarnings
- Expectation
- NOV returns to beating or meeting earnings estimates in at least 2 of the next 3 quarters.
CounterOilfield equipment earnings can be volatile quarter-to-quarter based on order timing, and the most recent beat of 16% in the year-ago quarter shows the company can outperform when conditions are favorable.
The current price of $20.52 is approximately 4.8% above the analyst consensus price target, meaning analysts as a group believe the stock is already overpriced at current levels, with essentially no upside modeled.
→StableBear case
- Expectation
- Analyst consensus price target is revised above $22 within 6 months on improved earnings visibility.
CounterThe stock is trading near its 52-week high with strong technical positioning and volume accumulation, suggesting momentum may carry it higher than analyst targets near-term.
TrendMatrix Research · core thesis
Engine thesis — one sentence
NOV Inc. has exceptional free cash flow conversion of 853% of net income and a strong balance sheet, but its quality score of 3.7 falls below the minimum floor, two recent consecutive earnings misses signal weakening profitability, and the price has already exceeded analyst consensus targets.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
3.7/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 0.5 |
| ROA | 2.1 |
| Gross margin | 0.1 |
| Op margin | 0.9 |
| Net margin | 0.5 |
| Current ratio | 8.4 |
| FCF quality | 10.0 |
| Moat | 3.9 |
| Piotroski F | 6.7 |
- ▸Excellent cash conversion: 853% FCF/NI
- ▸No competitive moat
Growth
0.9/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 1.9 |
| EPS growth | 0.0 |
- ▸Declining revenue: -2%
Momentum
3.2/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 8.9 |
| MACD | 0.7 |
| OBV | 1.0 |
| MA position | 4.0 |
| Volume | 1.3 |
- ▸Oversold in uptrend (RSI 16)
- ▸Volume distribution (falling OBV)
- ▸Above 200-day MA
Sentiment
7.1/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 7.5 |
| Price target | 7.9 |
| erm sentiment | 5.5 |
- ▸Analyst upside: 23%
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.0 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
Peer rank
2.4/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 5.6 |
| quality rank | 2.0 |
| growth rank | 2.2 |
Technical
8.3/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 8.4 |
| support resistance | 9.8 |
| 52w position | 6.6 |
Risk (lower is worse)
3.5/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 2.2 |
| days to cover | 0.8 |
| volatility | 3.1 |
| put call | 0.0 |
| implied vol | 2.7 |
| beta | 7.5 |
| debt equity | 8.5 |
- ▸High short interest: 16%
- ▸Elevated put/call: 2.59
- ▸High IV: 64%
Catalyst
3.3/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 1.1 |
| earnings timing | 5.0 |
| surprise avg | 0.0 |
| dividend safety | 5.2 |
- ▸Earnings concerns: 1B/2M
- ▸Dividend: 191.0%
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCKPassed (6)
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:23d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:3.2<4.5
- ASYMMETRY:1.4<1.5@spot
Warning (0)
none
Reward-to-Risk
1.36
Upside
+10.3%
Downside
7.6%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
The L1 gate blocked the positive-verdict path: a hard-floor threshold was breached, so dimensional pillars — including Technical at 8.3 could not lift the engine output above the verdict floor. Failed gate signal: MOMENTUM:3.2<4.5.
The strongest dimensions are Technical at 8.3, Sentiment at 7.1, and Value at 6.6; the weakest are Growth at 0.9, Peer rank at 2.4, and Momentum at 3.2. The V9 engine flagged 2 failed gates, producing an asymmetric reward-to-risk of 1.36 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Exceptional Free Cash Flow Conversion
Trip ifFree cash flow falls below 200% of net income for 2 consecutive quarters.
- P2Consecutive Earnings Misses
Trip ifEarnings surprise falls below negative 30% in at least 1 of the next 2 quarterly reports.
- P3Below Quality Floor Score
Trip ifQuality score remains below 4.0 for more than 4 consecutive quarters.
- P4Price Above Analyst Consensus
Trip ifPrice rises above $23 while analyst consensus target remains below $21.