What's Happening With Dnow Stock?
Dnow Inc. (NYSE: DNOW), a prominent provider of energy and industrial products, has risen 11% year-to-date, surpassing the S&P 500's 5% increase. Following the company's announcement of a $1.5 billion all-stock acquisition of energy infrastructure counterpart MRC Global Inc. (NYSE: MRC), investor interest has intensified, a move that could potentially transform the energy supply chain sector.
According to the agreement, MRC shareholders are set to receive 0.9489 shares of DNOW for every MRC share they own—representing an 8.5% premium to MRC's 30-day volume-weighted average price of $12.77 as of June 25. Based on the closing prices from that day, the transaction suggests a total enterprise value of roughly $3.0 billion. After the merger concludes, DNOW shareholders will possess approximately 56.5% of the newly formed company, whereas MRC investors will retain the remaining 43.5%, on a fully diluted basis. This all-stock agreement merges two significant entities in the energy infrastructure supply domain, granting DNOW increased scale, diversification, and negotiating leverage.
In spite of the positive news, macroeconomic challenges persist. WTI crude prices have declined 5% year-to-date, trading near $67 per barrel, due to concerns that OPEC+ may enhance supply by up to 411,000 barrels per day in August, adding to a planned 2025 increase of 1.78 million bpd (over 1.5% of global demand). Simultaneously, trade tensions are once again escalating. U.S. Treasury Secretary Scott Bessent alerted to the possibility of tariffs reaching as high as 50% being reinstated as soon as July 9, bringing back earlier proposed tariffs. These tariffs could negatively impact industrial and energy demand, crucial end markets for DNOW.
That said, investors looking for upside with reduced volatility compared to a single stock may want to consider the Trefis High Quality portfolio, which has reliably outperformed the S&P 500, delivering a total return exceeding 91% since its inception. It provides diversified exposure to robust companies with stable performance, yielding a smoother experience compared to the commodity-driven volatility associated with DNOW.
What Does Dnow's Valuation Look Like Compared To The S&P 500?
According to the price paid per dollar of sales or profit, DNOW stock appears inexpensive compared to the overall market.
• Dnow boasts a price-to-sales (P/S) ratio of 0.7 in contrast to a figure of 3.1 for the S&P 500
• Furthermore, the company's price-to-free cash flow (P/FCF) ratio is 8.4 compared to 20.9 for the S&P 500
• Additionally, it has a price-to-earnings (P/E) ratio of 18.9 vs. the benchmark's 26.9
How Have Dnow's Revenues Increased In Recent Years?
Dnow's revenues have experienced some growth in recent years.
• Dnow has recorded an average growth rate of 12.0% in its top line over the past 3 years (in comparison to an increase of 5.5% for the S&P 500)
• Its revenues have increased 4.7% from $2.3 billion to $2.4 billion in the last 12 months (compared to growth of 5.5% for the S&P 500)
• Additionally, its quarterly revenues rose by 6.4% to $599 million in the most recent quarter from $563 million a year earlier (compared to a 4.8% improvement for the S&P 500)
How Profitable Is Dnow?
Dnow's profit margins are considerably lower than those of most companies in the Trefis coverage universe.
• Dnow's Operating Income over the last four quarters stood at $121 million, marking a subpar Operating Margin of 5.0%
• DNOW Operating Cash Flow (OCF) during this period reached $201 million, indicating a subpar OCF Margin of 8.3% (compared to 14.9% for the S&P 500)
• Over the last four-quarter period, DNOW reported Net Income of $82 million, signifying a subpar Net Income Margin of 3.4% (in contrast to 11.6% for the S&P 500)
Does Dnow Appear Financially Stable?
Dnow's balance sheet demonstrates considerable strength.
• Dnow's Debt figure was $41 million at the end of the most recent quarter, while its market capitalization amounts to $1.5 billion (as of 7/2/2025). This leads to a very strong Debt-to-Equity Ratio of 2.6% (in comparison to 19.4% for the S&P 500). [Note: A low Debt-to-Equity Ratio is preferable]
• Cash (including cash equivalents) constitutes $219 million of the total $1.7 billion in Total Assets for Dnow. This results in a strong Cash-to-Assets Ratio of 13.3%
How Resilient Is DNOW Stock During Economic Downturns?
DNOW stock has performed poorer than the benchmark S&P 500 index during some of the recent downturns. While investors hope for a soft landing of the U.S. economy, what could be the potential impact if another recession occurs? Our dashboard How Low Can Stocks Go During A Market Crash outlines how key stocks have performed during and after the last six market crashes.
• DNOW stock saw a decline of 40.4% from a peak of $11.77 on 12 March 2021 to $7.01 on 19 August 2021, while the S&P 500 experienced a peak-to-bottom drop of 25.4%
• The stock fully rebounded to its pre-Crisis peak by 6 June 2022
• Since that time, the stock has risen to a peak of $17.59 on 18 February 2025 and currently trades around $14.40
• DNOW stock declined by 65.6% from its high of $11.82 on 16 January 2020 to $4.07 on 30 October 2020, compared to a peak-to-trough decline of 33.9% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 6 June 2022
Putting It All Together: What This Means For DNOW Stock
In conclusion, DNOW's performance according to the parameters outlined above is summarized as follows:
• Growth: Strong
• Profitability: Very Weak
• Financial Stability: Extremely Strong
• Downturn Resilience: Very Weak
• Overall: Neutral
Considering its significantly discounted valuation, this supports the idea that DNOW is a compelling purchase.
While DNOW stock appears promising, investing in a single stock carries risks. You might want to look into the Trefis Reinforced Value (RV) Portfolio, which has outperformed its all-cap stocks benchmark (a combination of the S&P 500, S&P mid-cap, and Russell 2000 benchmark indices), delivering strong returns for investors. What accounts for this? The quarterly rebalanced mix of large-, mid-, and small-cap RV Portfolio stocks offers an adaptive approach to maximize returns during favorable market conditions while minimizing losses in downturns, as detailed in RV Portfolio performance metrics.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
18 minutes ago
- Yahoo
B.C.'s independent wood manufacturers decry retroactive U.S. softwood duties
VANCOUVER — British Columbia's independent wood product makers say hundreds of small- and medium-sized manufacturers may be forced to shut down in light of the latest decision from the United States to raise anti-dumping duties on Canadian softwood. The province's Independent Wood Processors Association says in a release that the U.S. Commerce Department's decision this week to raise duties also includes a requirement for Canadian companies to retroactively remit duties for products shipped to the United States since Jan.1, 2023. Association chair Andy Rielly says in a statement that the requirement to pay duties on products shipped in the last 31 months could not only force small B.C. producers to shut down, but may also threaten operators' personal assets as they may have to risk using their homes as collateral to secure bonds to pay. Rielly is urging the Canadian government to create support programs to make sure B.C.'s independent wood processors can keep workers employed and their companies running. The U.S. Commerce Department said earlier in the week it will raise anti-dumping duties on Canadian softwood to 20.56 per cent, drawing the ire of several B.C. industry groups such as the B.C. Council of Forest Industries and the B.C. Lumber Trade Council. The Independent Wood Processors Association says the the "all-others" rate affecting its members will be raised from 14.4 per cent to 27.3 per cent, with the possibly of another increase "in the coming weeks" potentially pushing the duties for their products to as high as 35 per cent. 'Until the Canadian government can negotiate a settlement to this long-festering dispute, we need a government support program to keep our workers employed,' Rielly says, adding an overall duty of 35-per-cent would force members to pay retroactive duties of 27 per cent on products already shipped. Association executive director Brian Menzies describes independent wood product producers as "collateral damage" in the trade war, and says the only hope they have of avoiding the hit is either "a favourable appeal from the Canada-US-Mexico Agreement" or "pursuing a bilateral negotiated resolution." 'We should not face export taxes or quotas," Menzies says. "Our raw materials are not subsidized, and we are too small to 'dump' our products in the U.S. market. "We acquire logs and lumber at 'arm's length' from various suppliers on the open market, just like claims made by members of the U.S. Lumber Coalition, and yet our Canadian companies along with U.S. consumers must pay these unfair and costly duties.' Prime Minister Mark Carney had previously said that a future U.S.-Canada trade deal could include softwood lumber quotas. This report by The Canadian Press was first published July 26, 2025. Chuck Chiang, The Canadian Press Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Hamilton Spectator
19 minutes ago
- Hamilton Spectator
B.C.‘s independent wood manufacturers decry retroactive U.S. softwood duties
VANCOUVER - British Columbia's independent wood product makers say hundreds of small- and medium-sized manufacturers may be forced to shut down in light of the latest decision from the United States to raise anti-dumping duties on Canadian softwood. The province's Independent Wood Processors Association says in a release that the U.S. Commerce Department's decision this week to raise duties also includes a requirement for Canadian companies to retroactively remit duties for products shipped to the United States since Jan.1, 2023. Association chair Andy Rielly says in a statement that the requirement to pay duties on products shipped in the last 31 months could not only force small B.C. producers to shut down, but may also threaten operators' personal assets as they may have to risk using their homes as collateral to secure bonds to pay. Rielly is urging the Canadian government to create support programs to make sure B.C.'s independent wood processors can keep workers employed and their companies running. The U.S. Commerce Department said earlier in the week it will raise anti-dumping duties on Canadian softwood to 20.56 per cent, drawing the ire of several B.C. industry groups such as the B.C. Council of Forest Industries and the B.C. Lumber Trade Council. The Independent Wood Processors Association says the the 'all-others' rate affecting its members will be raised from 14.4 per cent to 27.3 per cent, with the possibly of another increase 'in the coming weeks' potentially pushing the duties for their products to as high as 35 per cent. 'Until the Canadian government can negotiate a settlement to this long-festering dispute, we need a government support program to keep our workers employed,' Rielly says, adding an overall duty of 35-per-cent would force members to pay retroactive duties of 27 per cent on products already shipped. Association executive director Brian Menzies describes independent wood product producers as 'collateral damage' in the trade war, and says the only hope they have of avoiding the hit is either 'a favourable appeal from the Canada-US-Mexico Agreement' or 'pursuing a bilateral negotiated resolution.' 'We should not face export taxes or quotas,' Menzies says. 'Our raw materials are not subsidized, and we are too small to 'dump' our products in the U.S. market. 'We acquire logs and lumber at 'arm's length' from various suppliers on the open market, just like claims made by members of the U.S. Lumber Coalition, and yet our Canadian companies along with U.S. consumers must pay these unfair and costly duties.' Prime Minister Mark Carney had previously said that a future U.S.-Canada trade deal could include softwood lumber quotas. This report by The Canadian Press was first published July 26, 2025.
Bloomberg
20 minutes ago
- Bloomberg
Union Pacific Is Said to Near Deal for Norfolk Southern
By , Ryan Gould, and Kiel Porter Save Union Pacific Corp. could reach an agreement to acquire Norfolk Southern Corp. and create a transcontinental rail behemoth as soon as early next week, people familiar with the matter said. The deal, which would be the largest deal ever in the rail industry, is likely to include both cash and stock, according to the people, who asked not to be identified discussing confidential information.
