DNOW (DNOW): Evaluating Valuation After Strong Q3 Earnings and Profit Surge

DNOW just released its third-quarter earnings, highlighting stronger sales and a major jump in net income compared to last year. This report gives investors more insight into how the business has been trending in 2025.

See our latest analysis for DNOW.

Following DNOW’s upbeat third-quarter earnings report, the company’s share price has shown some volatility. It is up 5.6% year-to-date, but has experienced a 12.6% dip over the past month. While the recent announcement highlights stronger fundamentals, the one-year total shareholder return stands at -4%, reminding investors that momentum has cooled lately after a strong multi-year run. Still, those who have stayed invested long-term have seen a remarkable 156% total return over five years, signaling the company’s resilience in a changing market environment.

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With shares still trading well below analyst price targets despite improved earnings, the question now is whether DNOW is undervalued or if the recent gains have already factored in all the company’s future growth potential.

Most Popular Narrative: 19.5% Undervalued

DNOW’s current share price of $13.68 sits well below the narrative’s latest fair value estimate. This suggests an appealing discount for investors heading into 2025 earnings.

Expansion into the midstream market through the acquisition of Whitco is expected to bolster supply chain capabilities, particularly in the aging and undersized midstream infrastructure. This could potentially increase revenues by accessing a larger market and offering day-to-day MRO and capital project opportunities. It also aligns with increasing demand for midstream services as energy companies look to expand and upgrade infrastructure.

Read the complete narrative.

Curious how DNOW’s much higher fair value was calculated? Hints lie in the company’s ambitious revenue growth assumptions and a future profit multiple that many would associate with tech stars, not industrials. Is this bullish outlook justified or wishful thinking? Discover the logic and bold projections powering this valuation in the full narrative.

Result: Fair Value of $17 (UNDERVALUED)

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

However, persistent softness in U.S. rig activity or weaker natural gas prices could quickly challenge even the most optimistic outlook for DNOW’s growth narrative.

Find out about the key risks to this DNOW narrative.

Build Your Own DNOW Narrative

Feel free to dig into the numbers and form your own perspective. Building a unique DNOW narrative 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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