Thursday, July 2, 2015

Seeking Alpha: National Oilwell Varco May Be Undervalued, But It's A Long Road Back

National Oilwell Varco (NYSE:NOV) may well be undervalued, to begin with, but the company is looking at a rough road for several years. Offshore drilling companies have refreshed and renewed their fleets, and National Oilwell Varco was a major beneficiary of that trend, but the weak utilization of offshore rigs today and the poor prospects for a near-term turnaround in drilling plans (absent a sharp reversal in oil prices) seem to point to a long hangover for this leading equipment manufacturer.

I think companies with leverage to service (offshore or onshore) and subsea will recover more quickly, but National Oilwell Varco may have some appeal if you are exceptionally patient and/or believe that drilling activity is going to recover faster than most other analysts and investors expect today. I think multiple approaches support the idea that NOV shares should be trading in the low to mid-$50s, but I'm happier owning Cameron (NYSE:CAM) today.

Follow this link for the full article:
National Oilwell Varco May Be Undervalued, But It's A Long Road Back

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