Here's Why Investors Should Consider Selling NOV Stock Now

NOV Inc. NOV has grown into a global leader in oilfield equipment and technology with operations spanning 548 locations across six continents. NOV delivers integrated systems, drilling equipment and services that help reduce the industry’s cost per barrel while enhancing efficiency. The company’s strong acquisition strategy and diverse portfolio — from rig technologies to advanced downhole tools — position it as a one-stop provider for the drilling industry.Once considered a promising player in its industry, NOV is now facing mounting challenges that have begun to erode both market confidence and investor sentiment. The company’s latest financial performance and strategic positioning raise difficult questions about its ability to regain momentum in a highly competitive landscape. Investors who have followed its trajectory closely may find themselves asking: Is this a chance to hold on for a potential turnaround or a clear signal that the risks now outweigh the rewards? Let us dig deeper to determine whether selling the stock is the most prudent move.Where Do Price Performance & Estimates Stand for NOV?In the past year, NOV’s shares have declined 22%, underperforming both the Mechanical and Equipment Oil and Gas sub-industry and the broader oil and energy sector's rise of 0.8% and 1.9%, respectively. Peer comparison further highlights the weakness, as USA Compression Partners, LP USAC, Oil States International, Inc. OIS and Solaris Energy Infrastructure, Inc. SEI gained 1.4%, 25.8% and 180%, respectively, during the same period.NOV, USAC, OIS & SEI’s One-Year Stock PerformanceImage Source: Zacks Investment ResearchThe Zacks Consensus Estimate for NOV’s 2025 earnings is pegged at $1 per share, indicating a 37.5% year-over-year decline. Over the past 60 days, the estimate has been revised downward by 9.1% from $1.10 to $1.NOV’s peer companies indicate a positive outlook for their 2025 earnings estimates, whereas NOV appears to be falling behind. The Zacks Consensus Estimate for USA Compression, Oil States International and Solaris Energy’s 2025 earnings indicates 23.9%, 158.8% and 88% year-over-year growth, respectively.NOV’s Earnings Estimates & RevisionsImage Source: Zacks Investment ResearchImage Source: Zacks Investment ResearchLet Us Crack the Reasons for NOV’s UnderperformanceSharp Decline in Profitability: During the second quarter of 2025,NOV’s net income fell 52% year over year to $108 million, with operating profit also plunging 54% to $143 million. This steep contraction underscores the company’s inability to maintain profitability in a challenging market. The significant reliance on one-time gains in 2024, such as the $130 million from a divestiture, has further magnified the weakness in ongoing operations. For investors seeking stable earnings growth, this deterioration in the profit base raises serious red flags about NOV’s near-term financial health and return potential. Peer comparison highlights further weakness, as Oil States’ and Solaris Energy’s second-quarter 2025 earnings per share increased 28.6% and 161.5% year over year.Margin Pressures & Rising Costs: Gross profit margins contracted materially to 20.4% from 26.6% a year ago, reflecting a weaker sales mix, tariffs and inflationary pressures. With both segments — Energy Products and Services and Energy Equipment — experiencing margin compression, NOV is struggling to pass through rising costs to customers. Although management is rolling out cost-control initiatives, persistent external pressures, such as supply chain inefficiencies and geopolitical instability, could continue to weigh on margins. This erosion undermines the company’s ability to deliver consistent shareholder value.Downbeat Guidance for Q3 2025: Management expects consolidated revenues to decline by 1-3% year over year in the third quarter of 2025, with adjusted EBITDA projected to be between $230 million and $250 million, below the second-quarter levels. This guidance highlights continued headwinds and limited near-term catalysts for recovery. With offshore activity growth not anticipated until 2026, investors face an extended wait for a meaningful turnaround, making NOV less attractive compared to its peer, USA Compression, which is better positioned in the current cycle.Weak Order Book & Deteriorating Book-to-Bill Ratio: New orders collapsed to $420 million in the second quarter of 2025, a steep 57% drop from the $977 million booked in the same period last year. The company’s book-to-bill ratio fell sharply to 66% compared to 177% last year, signaling future revenue softness and reduced visibility. While the backlog remains sizeable at $4.3 billion, the decline indicates that customers are delaying or scaling back commitments amid macro uncertainty. This trend reflects waning demand and could translate into weaker top-line growth in subsequent quarters, a bearish signal for long-term investors. However, the company recently secured a key contract to supply its APL Submerged Swivel and Yoke system for Argentina’s first-ever offshore floating LNG project, led by Southern Energy SA.Structural Weakness in the North American Market: North American customers continue to cut oil-directed drilling, with only modest gains in gas drilling offsetting the downturn. This structural weakness in the region, once a core growth driver, suggests NOV is increasingly reliant on more volatile international and offshore markets. While the company highlights resilience in offshore activity, delays in certain projects indicate near-term instability. Investors exposed to NOV risk prolonged underperformance if the North American drilling downturn persists or deepens.Final Verdict on NOV StockConsidering the confluence of weak financial results, deteriorating margins, downbeat guidance and structural challenges in its core North American market, NOV’s investment case has grown increasingly fragile. The company is underperforming both its sub-industry and broader sector, while peers are delivering robust earnings growth and stronger order activity. With profitability contracting sharply, orders collapsing and the book-to-bill ratio signaling waning demand, NOV’s near-term outlook is dominated by uncertainty and diminished growth potential. Management’s cautious guidance further underscores the lack of immediate catalysts for recovery, leaving investors facing an extended wait with limited reward prospects. Therefore, trimming this Zacks Rank #4 (Sell) company appears to be the prudent strategy, as the risks significantly outweigh the potential upside at this stage.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Quantum Computing Stocks Set To SoarArtificial intelligence has already reshaped the investment landscape, and its convergence with quantum computing could lead to the most significant wealth-building opportunities of our time.Today, you have a chance to position your portfolio at the forefront of this technological revolution. In our urgent special report, Beyond AI: The Quantum Leap in Computing Power, you'll discover the little-known stocks we believe will win the quantum computing race and deliver massive gains to early investors.Access the Report Free Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report NOV Inc. (NOV): Free Stock Analysis Report Oil States International, Inc. (OIS): Free Stock Analysis Report USA Compression Partners, LP (USAC): Free Stock Analysis Report Solaris Energy Infrastructure, Inc. (SEI): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks