Assessing DNOW’s Valuation as Analyst Optimism and Sector Outperformance Drive Up Earnings Estimates

Recent updates surrounding DNOW (DNOW) have drawn attention as earnings estimates for the full year have climbed in the past three months. This points to growing confidence in the company’s trajectory. This shift comes as the company outpaces its sector, hinting at stronger expected operational performance.

See our latest analysis for DNOW.

DNOW’s share price momentum has been building, as confidence in earnings and sector outperformance supports its case. While short-term share price returns have been modest, long-term total shareholder return stands at an impressive 219% over the past five years. Fresh optimism from quarterly beats and improved estimates suggests that the growth narrative may have more room to run.

If DNOW’s steady performance has you thinking bigger, now could be the time to broaden your investing horizons and discover fast growing stocks with high insider ownership

But with DNOW’s strong earnings growth and rising analyst targets, is the stock still undervalued? Or is the market already reflecting its future potential in the share price, leaving less upside for new investors?

Most Popular Narrative: 9.9% Undervalued

At $15.32, DNOW trails the most widely followed narrative's fair value estimate of $17.00, supporting the case for potential upside. This valuation uses a 6.8% discount rate and incorporates expected improvements in margin and revenue, offering an optimistic backdrop for future returns.

Expansion through acquisition and increasing demand for midstream services point to a strategic push into new markets and upgrades to infrastructure for improved supply chain capabilities. Investment in digital initiatives and focused international expansion are aimed at enhancing customer experience, operational efficiency, and accessing high-value markets for global revenue growth.

Read the complete narrative.

Want to know which bold assumptions drive this bullish outlook? The details behind this valuation include aggressive revenue targets paired with a significant margin shift, plus a future profit multiple that competes with industry leaders. Discover exactly what financial forecasts fuel this fair value—prepare to be surprised.

Result: Fair Value of $17.00 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent declines in U.S. rig counts and weak natural gas prices could weigh on DNOW’s outlook and challenge the current bullish narrative.

Find out about the key risks to this DNOW narrative.

Build Your Own DNOW Narrative

If you see the story differently or want to dig into the data yourself, shaping your own perspective takes just a few minutes. Do it your way.

A great starting point for your DNOW research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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