The case for & against
Bull & Bear analysis
Bullish
D-NOW (NYSE: DNOW) is a leading player in the industrial distribution sector, specializing in providing supply chain solutions primarily for the energy and industrial markets across upstream, midstream, and downstream sectors. Recently, the company has focused on leveraging synergies from its acquisition of MRC Global, aiming to enhance operational efficiencies and customer engagement while navigating a complex market landscape. The business operates in a critical segment that benefits from the rising demand for energy infrastructure, positioning it favorably amid ongoing sector growth trends.
Bull says
- ↑Q2 revenue rose to $1.3B, +10% sequentially (US +13%)
- ↑Adjusted EBITDA reached $60M, boosting margin to ~4.6%
- ↑Generated $133M operating cash flow; net debt cut by $95M (1.7× EBITDA)
- ↑Migrated 17 MRC sites to ERP; data-center sales set to reach $40–50M in 2026
- ↑Strong energy-infrastructure tailwinds and high oil-price sensitivity
- ↑$112M of share buybacks to date; disciplined capital allocation
Bear says
- ↓Ongoing ERP integration drives elevated costs, pressuring margins
- ↓Weak profit conversion amid integration expenses
- ↓Middle East geopolitical tensions delay projects, dampening growth
- ↓Q4 revenue may slide 6–10% seasonally, hitting cash flow
- ↓Securities lawsuit clouds investor sentiment and governance
- ↓Factor headwinds include poor profitability, small scale, weak momentum
Investment themes with DNOW
Infrastructure Development↓ -1.13%
DE · HWM · TT
Earnings Call · Q1 2024 · Mgmt. Guidance
Updated 05-08-2025neutral
Transcript signals
Bull points
- I'm incredibly pleased with the progress we made in the first quarter generating strong free cash flow of $80 million towards our $150 million full year target, which we expect could now approach $200 million in 2024.
- Our quarterly cash haul was much better than expected as we guided to negative free cash flow in the first quarter, but instead generated $80 million in free cash flow in 1Q '24 and $262 million in free cash flow over the last 4 quarters, the best trailing 4 quarter period of cash generation since 2016.
- The addition of Whitco's talented team, rich culture and technical expertise enhances our service levels and capabilities, enabling us to better support our customers midstream and energy evolution investments.
Bear points
- U.S. rate count was essentially flat quarter-over-quarter while U.S. completions declined 11% sequentially and 15% year-over-year.
- In Canada, revenue was $66 million for the quarter from an activity perspective. The year started off sluggish where our Canadian operations were adversely impacted by 2 weather events. In January, there was a 9-day time frame where the extreme sub-0 temperatures halted activity and delayed the start of the joint season.
- International revenue for the first quarter of 2024 was $62 million, down $10 million or 14% sequentially.
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