How the Latest Equipment Contracts Are Shaping NOV’s Stock Value in 2025

• Thinking of investing in NOV? If you have ever wondered whether the current stock price actually represents good value, you are in the right place.
• The stock has caught some attention lately, with a 5.5% rise over the past week and a 6.6% increase this month. However, it remains roughly flat for the year so far.
• Recent sector-wide optimism about new drilling projects and NOV's announcements regarding several new equipment contracts have influenced its price. Investors seem to be weighing these news items against a backdrop of broad energy market volatility.
• When it comes to valuation, NOV scores a solid 5 out of 6 on our undervaluation checks. Let's break down how this score was reached using classic valuation models. Also, keep an eye out for an even more insightful approach revealed at the end of the article.

Find out why NOV's 0.1% return over the last year is lagging behind its peers.

Approach 1: NOV Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates a company's true worth by projecting its future cash flows and discounting them back to their value today. In other words, it helps us figure out what NOV’s future earnings are really worth right now, giving investors insight into the stock's fair value.

For NOV, the current Free Cash Flow (FCF) stands at $940 million. According to analyst forecasts, FCF is expected to grow moderately over the next few years, reaching $581 million by 2029. While analysts provide reliable estimates for the next five years, beyond that, projections are carefully extrapolated based on historical trends and industry context.

By totaling and discounting these future cash flows, the DCF model assigns NOV’s intrinsic value at $24.16 per share. The current trading price is nearly 40% lower than this calculation, which suggests NOV shares are significantly undervalued at the moment.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests NOV is undervalued by 39.6%. Track this in your watchlist or portfolio, or discover 840 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for NOV.

Approach 2: NOV Price vs Earnings

For established and profitable companies like NOV, the Price-to-Earnings (PE) ratio is often the most useful valuation metric. The PE ratio tells us how much investors are willing to pay for each dollar of a company’s earnings, making it a direct snapshot of market expectations on profitability.

What constitutes a “fair” PE ratio depends on several factors, such as how quickly the company is expected to grow its earnings and the relative risks in its industry. Generally, companies with higher growth prospects or lower risk profiles trade at higher PE ratios, while those with less growth or more uncertainty tend to have lower multiples.

Currently, NOV trades at a PE ratio of 13.9x. This is below both the Energy Services industry average of 16.4x and significantly below the peer group average of 40.8x. While these benchmarks provide some context, they do not always tell the whole story when it comes to what is actually fair for NOV specifically.

That is where Simply Wall St’s Fair Ratio comes in. The Fair Ratio, which is 15.6x for NOV, considers growth outlook, company size, profit margins, and the unique risks NOV faces. This tailored approach offers a more accurate perspective than broad comparisons to peers or industry averages, because it adjusts for what really matters in NOV’s specific situation.

With NOV’s current PE at 13.9x and its Fair Ratio at 15.6x, the shares appear undervalued based on this metric alone.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1414 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your NOV Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is your personal story about a company, connecting what you know or believe about its future with your forecasts for revenue, earnings, and margins. Narratives tie a company’s story, such as major projects, market changes, or leadership shifts, to a set of financial assumptions and, from these, to a clear fair value.

Narratives make investing easier and more accessible by allowing anyone to lay out their case for a stock, with all calculations done for you right on Simply Wall St’s Community page, where millions of investors collaborate and compare perspectives. This helps you decide when to buy or sell: Simply compare your Narrative’s Fair Value with the current price, and you will see if your story suggests opportunity or risk. Plus, Narratives update automatically whenever new news, earnings, or company developments emerge, so your view always keeps up with reality.

For example, looking at NOV, some investors see renewed global drilling and digital upgrades propelling the shares as high as $20. Others, concerned about industry volatility, peg fair value closer to $11.

Do you think there's more to the story for NOV? Head over to our Community to see what others are saying!

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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