DNOW (NYSE:DNOW) Releases Quarterly Earnings Results, Beats Expectations By $0.03 EPS

Key Points

• DNOW beat quarterly expectations, reporting adjusted EPS of $0.12 versus the $0.09 consensus and revenue of $1.31 billion versus $1.27 billion expected. Revenue rose 108.1% year over year, though adjusted EPS declined from $0.27 in the prior-year quarter.
• Operating performance and cash generation improved significantly. Adjusted EBITDA rose 54% sequentially to $60 million, operating cash flow reached a record $133 million, and management raised its full-year outlook to approximately $5.0 billion–$5.1 billion in revenue with EBITDA margin approaching 4.5%.
• Risks remain despite the stronger outlook. DNOW posted a $21 million GAAP net loss, margins were pressured by aged-inventory charges and lower international activity, and the company faces mixed downstream demand, geopolitical uncertainty and newly announced securities class-action litigation.

DNOW (NYSE:DNOW - Get Free Report) issued its earnings results on Thursday. The oil and gas company reported $0.12 earnings per share (EPS) for the quarter, beating analysts' consensus estimates of $0.09 by $0.03, FiscalAI reports. DNOW had a negative net margin of 4.14% and a positive return on equity of 4.94%. The business had revenue of $1.31 billion for the quarter, compared to analyst estimates of $1.27 billion. During the same quarter in the prior year, the business posted $0.27 EPS. The company's revenue for the quarter was up 108.1% on a year-over-year basis.

Here are the key takeaways from DNOW's conference call:

• Second-quarter results exceeded expectations, with revenue rising 10% sequentially to $1.3 billion and adjusted EBITDA increasing 54% to $60 million, or 4.6% of revenue.
• Cash generation and working capital improved substantially, including a record $133 million of operating cash flow, a seven-day reduction in DSO, and a $131 million decline in inventory. Management expects an additional $25 million–$50 million inventory reduction during the rest of the year.
• U.S. growth was led by midstream, gas utilities, and upstream, while midstream revenue surpassed a $1 billion annualized run rate and gas utilities revenue reached an 11-quarter high. Data centers, LNG, water solutions, and infrastructure projects were identified as attractive growth opportunities.
• Management raised its full-year outlook to approximately $5.0 billion–$5.1 billion of revenue and EBITDA margin approaching 4.5%; third-quarter revenue is expected to grow at a low- to mid-single-digit sequential rate. The company also expects 2026 exit-rate cost synergies of about $30 million, above its original $17 million target.
• Integration and ERP-related costs remain a near-term headwind, while adjusted gross margin declined to 20.8% due partly to $4 million of aged-inventory charges and lower international vendor consideration. Downstream activity remains mixed, Canada was pressured by seasonal breakup, and Middle East project timing continues to be affected by geopolitical uncertainty.

DNOW Stock Performance

Shares of DNOW traded up $1.32 during trading hours on Thursday, reaching $15.54. 6,345,177 shares of the company's stock traded hands, compared to its average volume of 2,096,685. DNOW has a twelve month low of $10.94 and a twelve month high of $17.26. The business's fifty day simple moving average is $13.55 and its two-hundred day simple moving average is $13.32. The company has a debt-to-equity ratio of 0.27, a current ratio of 2.42 and a quick ratio of 1.14. The firm has a market capitalization of $2.84 billion, a price-to-earnings ratio of -21.29 and a beta of 0.82.

Wall Street Analyst Weigh In

A number of brokerages have recently weighed in on DNOW. Weiss Ratings reiterated a "sell (d+)" rating on shares of DNOW in a report on Wednesday, May 27th. Wall Street Zen cut DNOW from a "hold" rating to a "sell" rating in a research note on Saturday, May 9th. Freedom Capital raised shares of DNOW to a "strong-buy" rating in a report on Monday, June 22nd. Zacks Research upgraded shares of DNOW from a "strong sell" rating to a "hold" rating in a research note on Friday, May 22nd. Finally, DA Davidson initiated coverage on shares of DNOW in a report on Tuesday, June 16th. They set a "buy" rating and a $17.00 target price on the stock. One equities research analyst has rated the stock with a Strong Buy rating, three have issued a Buy rating, one has given a Hold rating and one has assigned a Sell rating to the company's stock. Based on data from MarketBeat.com, DNOW has a consensus rating of "Moderate Buy" and a consensus price target of $17.00.

Key DNOW News

Here are the key news stories impacting DNOW this week:

• Positive Sentiment: Quarterly results exceeded expectations. DNOW reported revenue of $1.307 billion versus the $1.27 billion analyst estimate, while adjusted EPS of $0.12 surpassed the $0.08–$0.09 consensus range. Revenue rose 10% sequentially and 108.1% year over year, helped by stronger U.S. activity. DNOW Reports Second Quarter 2026 Results
• Positive Sentiment: Cash flow and operating performance improved. Operating cash flow reached a record $133 million, adjusted EBITDA increased 54% sequentially to $60 million, and net-debt leverage improved to 1.7 times. Management also highlighted record annualized U.S. midstream revenue above $1 billion and stronger sequential growth in gas utility and upstream markets. DNOW Strong Second Quarter Results
• Positive Sentiment: Shareholder returns provided additional support. DNOW repurchased $25 million of stock during the quarter and $75 million year to date under its $160 million authorization, signaling management’s confidence in the company’s cash generation and long-term strategy. DNOW Beats Q2 Estimates
• Neutral Sentiment: Profitability remains mixed. Despite the adjusted profit, DNOW posted a GAAP net loss of $21 million, or $0.11 per diluted share. Gross margin was 18.6%, below 20.5% a year earlier, and adjusted EPS declined from $0.27 in the comparable quarter.
• Negative Sentiment: Legal risk has become more prominent. Rosen Law Firm and Bronstein, Gewirtz & Grossman announced securities class actions alleging DNOW and certain officers violated federal securities laws in connection with the company’s 2025 special meeting. Investors seeking lead-plaintiff status face an October 2, 2026 deadline. The allegations could create legal costs, management distraction and reputational risk, although the claims have not been proven. DNOW Securities Class Action

Hedge Funds Weigh In On DNOW

A number of institutional investors and hedge funds have recently bought and sold shares of DNOW. Neuberger Berman Group LLC bought a new stake in DNOW in the fourth quarter worth about $159,000. Cibc World Markets Corp bought a new position in shares of DNOW during the 4th quarter valued at about $163,000. Haven Private LLC bought a new position in shares of DNOW during the 4th quarter valued at about $171,000. CIBC Bancorp USA Inc. acquired a new position in shares of DNOW in the 3rd quarter worth approximately $169,000. Finally, Entropy Technologies LP acquired a new position in shares of DNOW in the 3rd quarter worth approximately $168,000. Institutional investors own 97.63% of the company's stock.

DNOW Company Profile

DistributionNOW NYSE: DNOW is a global distributor of energy and industrial products, serving a broad range of end-markets including oil and gas, petrochemical, power generation, and industrial manufacturing. Headquartered in Houston, Texas, the company provides solutions across the life cycle of energy and industrial assets, with an emphasis on safety, reliability and operational efficiency.

The company’s core product portfolio includes piping systems and related components (such as valves, fittings, flanges and gaskets), instrumentation, electrical and automation equipment, fasteners, industrial safety supplies, chemicals and composite products.

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