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NOW Inc. Souring After Huge Earnings Report

Oil Rig

Oil-field equipment distributor NOW Inc. (NYSE:DNOW) soared more than 15% in the morning today as a reaction from an extremely positive quarterly results.  NOW Inc. has been performing exceptionally well during 2018, with their first quarter revenue up 21% year-over-year.

Today, NOW Inc. filled their 10-Q, revealing some expectation-beating numbers.  First, revenue was up 19$ year-over-year at $777 million.  In addition to a raise in revenue, net income is now positive at $14 million compared to the net loss of $17 million the previous year.  These numbers are huge as this raise in revenue can help speed up their growth throughout the future.

CEO Robert Workman mentioned that the company is focused on growth though new opportunities and strengthening existing relationships as well as a focus on reducing and minimizing overall operation costs.  In the recent 10-Q we’re able to see this has already started to unfold a bit.  On the revenue side, growth has been great in 2018, with anticipation to continue revenue growth in the “high-teens” range.

In the fillings, we can although there has been a slight increase in their cost of products, the increase in revenue compensated for the increase, and produced a positive operating profit of $14 million. Compared to this time last year, NOW Inc. is in a much better financial position.

From a technical standpoint, NOW Inc. seems to have bottomed out at $9.25 per share earlier in the year, and has made a nice bounce off that price level.  Since then, it has rose over 80% in just 6 months.  Additionally, the Moving Average Convergence Divergence (MACD) has made a “gold cross” on the 1-month chart, which is a bullish indicator.  If management keeps working on improving their current operations and lowering operating costs, we could see the growth continue into the end of the year.

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