NOV (NOV) Stock Lacks Conviction Despite Stronger Q3 Earnings

NOV just posted its Q3 2026 scorecard and the reaction has been muted. The stock slipped about 1% on Friday to US$19.16, even as the oilfield equipment group printed US$2.23b of revenue and US$90m of net income. For a business long framed as a margin recovery story, the real tension today sits in profitability. Earnings per share of US$0.25 keep the recovery narrative alive, but the market is clearly not prepared to pay up yet for that progress.

We appreciate NOV’s revenue base, but remain concerned that its earnings power still feels fragile. Benchmark this quarter against a list of solid balance sheet and fundamentals stocks (25 results) to see how other industrials combine scale with sturdier profitability.

Q3 2026 Earnings Summary

• Revenue (Q3 2026 vs Q3 2025): US$2,226m vs. US$2,176m (up about 2%)
• Net Income (Q3 2026 vs Q3 2025): US$90m vs. US$42m (up about 114%)
• Basic EPS (Q3 2026 vs Q3 2025): US$0.25 vs. US$0.11 (up about 122%)
• Adjusted EBITDA (Q3 2026 vs Q3 2025): US$281m, with the prior-year Q3 figure not disclosed in this set (margin at 12.6% in Q3 2026)

NOV says it can reach its full EBITDA capacity again over time. Ask Charlie what makes NOV confident in $1.5B EBITDA capacity.

NOV Backlog Story Meets Earnings Reality

The bullish pitch is that NOV turns record offshore and digital demand into enduring cash and profit, not just a short upswing.

"The main thing that has to go right is that NOV converts its current offshore and digital backlogs into durable EBITDA and free cash flow while keeping tariff and geopolitical headwinds from eroding margins."

Q3 results show part of that playbook working. Energy Equipment and Energy Products & Services together delivered US$281m of adjusted EBITDA and mid teens segment margins, with flexible pipe logging a seventh straight quarter of revenue and margin gains. Orders grew in key product lines and total backlog sits near US$4b, yet free cash flow turned into a US$47m use due to working capital drag, so the conversion milestone is not there yet.

That disagreement has a full argument behind it. → Uncover the higher Fair Value this Narrative argues for.

NOV Bear Case: Cash Conversion Concerns Still Lingering

The harshest critics argue that NOV’s problem is not demand; it is turning that activity into dependable cash and margins.

"Even with progress on a US$100 million annualized cost reduction program and early signs that savings are beginning to outpace tariffs and inflation, structurally low gross margins near 20.3% and a historical free cash flow margin near 3.4% to 3.6% suggest that higher ongoing tariff expense of about US$30 million per quarter and rising capital expenditure could still constrain future net margins and free cash flow."

Q3 results keep that concern alive. Adjusted EBITDA margin at 12.6% looks healthier; yet free cash flow swung to a US$47m use and capex guidance remains elevated. Working capital drag linked to Middle East milestones shows backlog quality is improving faster than conversion discipline, so the key bear milestone, cleaner cash generation, is still missed this quarter.

Hunt For Mispriced Cash Engines

NOV just reported earnings that did not fully resolve market skepticism about its outlook. The real opportunity is in stocks that could be undervalued before consensus shifts.

• Company 1 - 47% below our estimate - uses heavy AI infrastructure spending to scale automated ad tools, business messaging and early AI devices across customer workflows.
• Company 2 - 27% below our estimate - ties specialized test equipment and diagnostic services directly to grid upgrades, defense programs and high-specification power projects utilities and contractors prioritize.
• Company 3 - 31% below our estimate - embeds custom chips and connectivity hardware at bottlenecks where data must move, connect and secure across clouds, data centers and corporate systems.

Three companies from the same screener. Open every one of the 29 undervalued companies on it →

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