Is Buying Stock In NOW Inc. (DNOW) A Good Move Today?

NOW Inc. (NYSE:DNOW) saw an upside of 0.11% to close Tuesday at $8.85 after adding $0.01 on the day. The 5-day average trading volume is 893,040 shares of the company’s common stock. It has gained $9.13 in the past week. An average of 847,010 shares of the company has been traded in the last 20 days, and the 50-day average volume stands at 724,914.

DNOW’s 1-month performance is 20.24% or $1.51 on its low of $6.83 reached on 09/20/21. The company’s shares have touched a 52-week low of $4.03 and high of $11.98, with the stock’s rally to the 52-week high happening on 03/15/21. YTD, DNOW has achieved 23.26% or $1.67. However, the current price is down -26.13%% from the 52-week high price.


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Valuation Metrics

NOW Inc. (DNOW) has a trailing price-to-earnings (P/E) ratio of 18.90 for the broader industry and 19.63 for the sector. The company’s PE ratio for the last five years has touched a high of 581.33 and a low of 18.67. DNOW stock has a beta of 2.06. Moving on to other valuation ratios, the trailing price-to-sales (P/S) ratio is 0.67 while the price-to-book (PB) in the most recent quarter is 1.40, with the price to cash flow ratio at 8.29.

NOW Inc.’s quick ratio for the period ended June 29 was 1.70, with the current ratio over the same period at 2.40 meaning that DNOW stock is able to fulfill its debt obligations. As well, the company’s long term debt to equity for the quarter ending June 29 was 0.00, while the total debt to equity was 0.00. In terms of profitability, the gross margin trailing 12 months is 19.00%. The trailing 12-month EBITDA margin is -3.27% while for the period ending June 29; NOW Inc.’s operating margin was -4.70%. The firm’s gross profit as reported stood at $292.0 million against revenue of $1.62 billion.

Earnings Surprise

For the quarterly period ending June 29 this year, Net income and sales went up compared to those figures reported in the previous quarter. Net income grew 7.5% to $400.0 million, while revenue of $361.0 million was 9.75% off the previous quarter. Analysts expected DNOW to announce -$0.01 per share in earnings in its latest quarter, but it posted $0, representing a 100.00% surprise. EBITDA for the quarter stood at more than $6.0 million. DNOW stock balance sheet for the quarter ending June 29 shows that total liabilities totaled 374.0 million, with total debt at $60.0 million. Shareholders hold equity totaling $110.56 million

Technical Picture

Let’s look briefly at NOW Inc. (DNOW) price momentum from a technical analysis perspective. The 9-day relative strength index as at close on 12 October was 74.49% to suggest the stock is trending Overbought, with historical volatility in this time period at 43.36%.

The stock’s 5-day moving average is $8.66, reflecting a +4.24% or $0.36 change from its current price. DNOW is currently trading +24.12% above its 20-day SMA, -16.35% above its 100-day SMA. However, the stock’s current price level is away from the SMA50 and SMA200 by -8.00% and +29.20% respectively.

Stochastic %K and %D was 89.41% and 90.01% and the average true range (ATR) pointed at 0.36. The RSI (14) points at 68.59%, while the 14-day stochastic is at 84.91% with the period’s ATR at 0.35. The stock’s 9-day MACD Oscillator is pointing at 0.45 and 0.71 on the 14-day charts.

Analyst Ratings

In the most recent analyst report for NOW Inc. (NYSE: DNOW), Stifel upgraded it to a Buy rating. They previously had a Hold rating on the stock.

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