DNOW (NYSE:DNOW) Posts Quarterly Earnings Results, Beats Estimates By $0.03 EPS

DNOW (NYSE:DNOW) released its earnings results on Thursday. The oil and gas company reported $0.12 EPS for the quarter, topping analysts’ consensus estimates of $0.09 by $0.03, FiscalAI reports. DNOW had a negative net margin of 4.58% and a positive return on equity of 3.91%. The business had revenue of $1.31 billion for the quarter, compared to the consensus estimate of $1.27 billion. During the same period in the previous year, the firm earned $0.27 EPS. The business’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 Up 7.3%

Shares of DNOW stock traded up $1.13 on Friday, reaching $16.52. 4,134,245 shares of the company’s stock traded hands, compared to its average volume of 2,340,680. DNOW has a 12-month low of $10.94 and a 12-month high of $17.26. The company has a debt-to-equity ratio of 0.23, a quick ratio of 1.14 and a current ratio of 2.14. The company has a market capitalization of $3.02 billion, a P/E ratio of -15.44 and a beta of 0.82. The business’s 50 day moving average price is $13.62 and its two-hundred day moving average price is $13.34.

Institutional Investors Weigh In On DNOW

Institutional investors have recently bought and sold shares of the business. Quarry LP increased its holdings in shares of DNOW by 712.6% in the 4th quarter. Quarry LP now owns 1,942 shares of the oil and gas company’s stock valued at $26,000 after purchasing an additional 1,703 shares during the period. EverSource Wealth Advisors LLC lifted its position in shares of DNOW by 190.5% in the second quarter. EverSource Wealth Advisors LLC now owns 2,423 shares of the oil and gas company’s stock worth $36,000 after purchasing an additional 1,589 shares in the last quarter. Arax Advisory Partners boosted its holdings in shares of DNOW by 336.3% during the fourth quarter. Arax Advisory Partners now owns 2,797 shares of the oil and gas company’s stock worth $37,000 after purchasing an additional 2,156 shares during the period. Kemnay Advisory Services Inc. acquired a new stake in shares of DNOW during the fourth quarter worth approximately $46,000. Finally, Quadrant Capital Group LLC grew its position in DNOW by 266.4% during the fourth quarter. Quadrant Capital Group LLC now owns 3,620 shares of the oil and gas company’s stock valued at $48,000 after purchasing an additional 2,632 shares in the last quarter. 97.63% of the stock is currently owned by institutional investors and hedge funds.

More DNOW News

Here are the key news stories impacting DNOW this week:

• Positive Sentiment: Quarterly results exceeded expectations: Q2 revenue rose 108% year over year to $1.307 billion, ahead of the approximately $1.27 billion consensus estimate. Adjusted EPS was $0.12, beating forecasts ranging from $0.08 to $0.09, although the company reported a GAAP net loss of $21 million, or $0.11 per share. DNOW Beats Q2 Earnings and Revenue Estimates
• Positive Sentiment: Operating momentum improved: Revenue increased 10% sequentially, U.S. revenue grew 13%, and adjusted EBITDA climbed 54% sequentially to $60 million as integration and cost-management efforts advanced. Management also said U.S. midstream revenue exceeded a $1 billion annualized rate for the first time. DNOW Reports Second Quarter 2026 Results
• Positive Sentiment: Cash flow and capital returns strengthened: Operating cash flow reached a record $133 million, while DNOW repurchased $25 million of stock during the quarter and $75 million year to date under its $160 million authorization. Net debt leverage improved to 1.7 times. DNOW Reports Strong Second Quarter Results
• Positive Sentiment: Analyst sentiment improved: Susquehanna raised its price target from $16 to $19 and upgraded DNOW to “positive,” citing the company’s stronger sales and raised 2026 revenue and cash-flow outlook. Benzinga Analyst Update
• Neutral Sentiment: Profitability remains mixed: Reported gross margin was 18.6%, below 20.5% a year earlier, and adjusted EBITDA represented 4.6% of revenue. Investors may continue to monitor whether the higher sales volume translates into sustainable GAAP profitability.
• Negative Sentiment: Legal overhang persists: Rosen Law Firm and Bronstein, Gewirtz & Grossman announced securities class actions alleging investor harm related to DNOW’s 2025 special meeting disclosures. The developments could create litigation costs and reputational risk, although they have not offset the positive earnings reaction. DNOW Securities Class Action

Analyst Ratings Changes

A number of brokerages recently weighed in on DNOW. Susquehanna raised their target price on shares of DNOW from $16.00 to $19.00 and gave the stock a “positive” rating in a report on Friday. Zacks Research raised DNOW from a “strong sell” rating to a “hold” rating in a report on Friday, May 22nd. DA Davidson initiated coverage on DNOW in a research report on Tuesday, June 16th. They set a “buy” rating and a $17.00 price objective for the company. Weiss Ratings reissued a “sell (d+)” rating on shares of DNOW in a research note on Wednesday, May 27th. Finally, Wall Street Zen cut DNOW from a “hold” rating to a “sell” rating in a report on Saturday, May 9th. One equities research analyst has rated the stock with a Strong Buy rating, three have assigned a Buy rating, one has assigned a Hold rating and one has given a Sell rating to the stock. According to MarketBeat, the stock currently has a consensus rating of “Moderate Buy” and a consensus price target of $17.75.

About DNOW

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.