Earnings Beat: NOV Inc. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

It's been a mediocre week for NOV Inc. (NYSE:NOV) shareholders, with the stock dropping 16% to US$17.62 in the week since its latest annual results. It looks like a credible result overall - although revenues of US$8.6b were what the analysts expected, NOV surprised by delivering a (statutory) profit of US$2.50 per share, an impressive 77% above what was forecast. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for NOV

Taking into account the latest results, the consensus forecast from NOV's 17 analysts is for revenues of US$9.17b in 2024. This reflects a credible 6.9% improvement in revenue compared to the last 12 months. Statutory earnings per share are forecast to crater 41% to US$1.49 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$9.26b and earnings per share (EPS) of US$1.72 in 2024. So there's definitely been a decline in sentiment after the latest results, noting the real cut to new EPS forecasts.

It might be a surprise to learn that the consensus price target was broadly unchanged at US$25.17, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic NOV analyst has a price target of US$33.00 per share, while the most pessimistic values it at US$19.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. One thing stands out from these estimates, which is that NOV is forecast to grow faster in the future than it has in the past, with revenues expected to display 6.9% annualised growth until the end of 2024. If achieved, this would be a much better result than the 2.9% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 7.9% per year. So it looks like NOV is expected to grow at about the same rate as the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for NOV. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall industry. The consensus price target held steady at US$25.17, with the latest estimates not enough to have an impact on their price targets.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple NOV analysts - going out to 2026, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 1 warning sign for NOV that you need to be mindful of.

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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.