Prudent Stock: 11/27/07

(NOV) National Oilwell Varco, Inc. engages in the design, construction, manufacture, and sale of systems, components, and products to the oil and gas industry worldwide. It operates in three segments: Rig Technology, Petroleum Services & Supplies, and Distribution Services. The Rig Technology segment produces and sells systems for the drilling, completion, and servicing of oil and gas wells. It provides equipment that automates well construction and management operations, such as offshore and onshore drilling rigs; derricks; pipe lifting, racking, rotating, and assembly systems; coiled tubing equipment and pressure pumping units; well workover rigs; wireline winches; and cranes. The Petroleum Services & Supplies segment offers various consumable goods and services used to drill, complete, remediate, and workover oil and gas wells and service pipelines, flowlines, and other oilfield tubular goods. Its products include transfer pumps, solids control systems, drilling motors and other downhole tools, rig instrumentation systems, and mud pump consumables. This segment also provides oilfield tubular services, including the provision of inspection and internal coating services, and equipment for drillpipe, linepipe, tubing, casing, and pipelines; and engages in the design, manufacture, and sale of coiled tubing pipes and composite pipes for applications in corrosive environments. The Distribution Services segment offers maintenance, support, repair, and operating supplies; and spare parts to drill site and production locations. National Oilwell Varco serves drilling contractors, shipyards and other rig fabricators, well servicing companies, national oil companies, independent oil and gas companies, supply stores, and pipe-running service providers. The company is based in Houston, Texas.


NOV has shown a consistent and predictable history of financial performance. Its current EPS is $4.58, and has a forecasted earnings growth rate of 25%, and a current PE of 15.
Given the companies forecasted earnings per share, forecasted earnings growth, profitability, given current interest, and inflation rates it should be fairly valued at a range of $123-128 per share. Recently the stock was hammered due to growth rate concerns, slowing economy or possible recession, it’s been hanging in well the last 4-5 trading sessions. Stock made a bottom around $61 and seeing as how its fair value is over a 120 it looks like a good buy.