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February 2013
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National Oilwell Varco: Excellent Opportunity To Invest In Undervalued Company

With the rapid evolution occurring in the oil and gas equipment service industry, National Oilwell Varco (NOV) looks to be a looks poised to capitalize on these changes. As the introduction of new fracking techniques, increased safety regulations and the International Energy Agency (IEA) forecasting the U.S. to become the world’s largest oil producer by 2020, these factors should give the industry a boost. As National Oilwell Varco is situated very well to capitalize on these changes the recent pullback in price is offering an excellent opportunity to invest.

Profitability is a class of financial metrics used to assess a business’ ability to generate earnings compared with expenses and other relevant costs incurred during a specific period of time. In this section, we will look at four tests of profitability. They are: net Income, operating cash flow, return on assets, and quality of earnings. From these four metrics, we will establish if the company is making money, and gauge the quality of the reported profits.

  • Net income 2010 = $1.667 billion.
  • Net income 2011 = $1.994 billion.
  • Net income 2012 = $2.491 billion.

Over the past three years National Oilwell’s net profits have increased from $1.667 billion in 2010 to $2.491 billion in 2012. This signifies a increase of 49.43% in earnings over the past 3 years.

To read more: National Oilwell Varco: An Excellent Opportunity to invest in a strong undervalued company

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