NEW YORK (TheStreet) --Shares of National Oilwell Varco (NOV - Get Report) are declining by 2.80% to $36.49 in midday trading on Tuesday afternoon, as analysts are expecting the oil related services company to post a dramatic year over year decline in earnings per share and revenue for the 2015 third quarter.
The company will release its latest financial results before the market open on Wednesday morning.
Analysts surveyed by Thomson Reuters are looking for earnings of 56 cents per share on revenue of $3.47 billion for the September ended period.
National Oilwell Varco's earnings came in at $1.62 per share on revenue of $5.59 billion for the 2014 third quarter.
The company, which is based in Houston, designs, manufactures and sells equipment and components used in oil and gas drilling operations.
Another factor weighing on the stock today is the decline in oil prices.
Oil prices are down due to concerns regarding the global supply glut and inventory data out of the U.S. that is expected to show another rise in crude stocks, Reuters reports.
Separately, TheStreet Ratings team rates NATIONAL OILWELL VARCO INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
We rate NATIONAL OILWELL VARCO INC (NOV) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including poor profit margins, weak operating cash flow and a generally disappointing performance in the stock itself.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- NOV's debt-to-equity ratio is very low at 0.23 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.06, which illustrates the ability to avoid short-term cash problems.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 31.2%. Since the same quarter one year prior, revenues fell by 25.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The gross profit margin for NATIONAL OILWELL VARCO INC is currently lower than what is desirable, coming in at 26.71%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 7.39% trails that of the industry average.
- Net operating cash flow has significantly decreased to $194.00 million or 77.72% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full analysis from the report here: NOV