Intrinsic value of NOW Inc. - DNOW

Previous Close

$12.67

  Intrinsic Value

$2.03

stock screener

  Rating & Target

str. sell

-84%

Previous close

$12.67

 
Intrinsic value

$2.03

 
Up/down potential

-84%

 
Rating

str. sell

We calculate the intrinsic value of DNOW stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 1.4

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -30.00
  29.90
  27.41
  25.17
  23.15
  21.34
  19.70
  18.23
  16.91
  15.72
  14.65
  13.68
  12.81
  12.03
  11.33
  10.70
  10.13
  9.61
  9.15
  8.74
  8.36
  8.03
  7.72
  7.45
  7.21
  6.99
  6.79
  6.61
  6.45
  6.30
  6.17
Revenue, $m
  2,107
  2,737
  3,487
  4,365
  5,375
  6,522
  7,808
  9,231
  10,792
  12,488
  14,318
  16,276
  18,362
  20,572
  22,902
  25,352
  27,919
  30,603
  33,404
  36,323
  39,361
  42,520
  45,805
  49,218
  52,765
  56,452
  60,283
  64,267
  68,411
  72,723
  77,213
Variable operating expenses, $m
 
  3,190
  4,056
  5,069
  6,236
  7,560
  9,043
  10,686
  12,488
  14,446
  16,557
  18,787
  21,194
  23,744
  26,435
  29,262
  32,225
  35,324
  38,557
  41,925
  45,432
  49,079
  52,870
  56,810
  60,904
  65,159
  69,582
  74,180
  78,963
  83,940
  89,122
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  2,329
  3,190
  4,056
  5,069
  6,236
  7,560
  9,043
  10,686
  12,488
  14,446
  16,557
  18,787
  21,194
  23,744
  26,435
  29,262
  32,225
  35,324
  38,557
  41,925
  45,432
  49,079
  52,870
  56,810
  60,904
  65,159
  69,582
  74,180
  78,963
  83,940
  89,122
Operating income, $m
  -222
  -453
  -569
  -704
  -860
  -1,037
  -1,235
  -1,455
  -1,696
  -1,957
  -2,239
  -2,510
  -2,832
  -3,173
  -3,532
  -3,910
  -4,306
  -4,720
  -5,152
  -5,602
  -6,071
  -6,558
  -7,065
  -7,591
  -8,139
  -8,707
  -9,298
  -9,913
  -10,552
  -11,217
  -11,909
EBITDA, $m
  -169
  -384
  -489
  -612
  -753
  -914
  -1,094
  -1,294
  -1,512
  -1,750
  -2,007
  -2,281
  -2,573
  -2,883
  -3,210
  -3,553
  -3,913
  -4,289
  -4,682
  -5,091
  -5,516
  -5,959
  -6,420
  -6,898
  -7,395
  -7,912
  -8,449
  -9,007
  -9,588
  -10,192
  -10,821
Interest expense (income), $m
  4
  3
  9
  16
  24
  33
  44
  55
  68
  83
  98
  115
  133
  152
  173
  194
  217
  240
  265
  291
  317
  345
  374
  404
  436
  468
  502
  537
  574
  612
  652
Earnings before tax, $m
  -230
  -456
  -578
  -720
  -884
  -1,070
  -1,279
  -1,510
  -1,764
  -2,040
  -2,338
  -2,626
  -2,965
  -3,325
  -3,705
  -4,104
  -4,523
  -4,960
  -5,417
  -5,893
  -6,388
  -6,904
  -7,439
  -7,996
  -8,574
  -9,176
  -9,800
  -10,450
  -11,126
  -11,829
  -12,561
Tax expense, $m
  4
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  -234
  -456
  -578
  -720
  -884
  -1,070
  -1,279
  -1,510
  -1,764
  -2,040
  -2,338
  -2,626
  -2,965
  -3,325
  -3,705
  -4,104
  -4,523
  -4,960
  -5,417
  -5,893
  -6,388
  -6,904
  -7,439
  -7,996
  -8,574
  -9,176
  -9,800
  -10,450
  -11,126
  -11,829
  -12,561

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  106
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  1,603
  1,945
  2,478
  3,102
  3,821
  4,636
  5,549
  6,561
  7,670
  8,876
  10,176
  11,568
  13,051
  14,621
  16,277
  18,018
  19,843
  21,751
  23,741
  25,816
  27,975
  30,221
  32,555
  34,981
  37,502
  40,122
  42,845
  45,677
  48,622
  51,687
  54,877
Adjusted assets (=assets-cash), $m
  1,497
  1,945
  2,478
  3,102
  3,821
  4,636
  5,549
  6,561
  7,670
  8,876
  10,176
  11,568
  13,051
  14,621
  16,277
  18,018
  19,843
  21,751
  23,741
  25,816
  27,975
  30,221
  32,555
  34,981
  37,502
  40,122
  42,845
  45,677
  48,622
  51,687
  54,877
Revenue / Adjusted assets
  1.407
  1.407
  1.407
  1.407
  1.407
  1.407
  1.407
  1.407
  1.407
  1.407
  1.407
  1.407
  1.407
  1.407
  1.407
  1.407
  1.407
  1.407
  1.407
  1.407
  1.407
  1.407
  1.407
  1.407
  1.407
  1.407
  1.407
  1.407
  1.407
  1.407
  1.407
Average production assets, $m
  327
  424
  541
  677
  833
  1,011
  1,210
  1,431
  1,673
  1,936
  2,219
  2,523
  2,846
  3,189
  3,550
  3,930
  4,327
  4,744
  5,178
  5,630
  6,101
  6,591
  7,100
  7,629
  8,179
  8,750
  9,344
  9,961
  10,604
  11,272
  11,968
Working capital, $m
  612
  657
  837
  1,048
  1,290
  1,565
  1,874
  2,215
  2,590
  2,997
  3,436
  3,906
  4,407
  4,937
  5,497
  6,084
  6,701
  7,345
  8,017
  8,717
  9,447
  10,205
  10,993
  11,812
  12,664
  13,548
  14,468
  15,424
  16,419
  17,454
  18,531
Total debt, $m
  65
  192
  341
  517
  719
  948
  1,204
  1,489
  1,800
  2,139
  2,504
  2,896
  3,312
  3,753
  4,219
  4,708
  5,221
  5,757
  6,316
  6,899
  7,506
  8,137
  8,793
  9,475
  10,183
  10,919
  11,685
  12,480
  13,308
  14,169
  15,066
Total liabilities, $m
  420
  547
  696
  872
  1,074
  1,303
  1,559
  1,844
  2,155
  2,494
  2,859
  3,251
  3,667
  4,108
  4,574
  5,063
  5,576
  6,112
  6,671
  7,254
  7,861
  8,492
  9,148
  9,830
  10,538
  11,274
  12,040
  12,835
  13,663
  14,524
  15,421
Total equity, $m
  1,183
  1,399
  1,782
  2,231
  2,747
  3,333
  3,990
  4,717
  5,515
  6,382
  7,316
  8,318
  9,383
  10,512
  11,703
  12,955
  14,267
  15,639
  17,070
  18,562
  20,114
  21,729
  23,407
  25,151
  26,964
  28,848
  30,806
  32,842
  34,959
  37,163
  39,457
Total liabilities and equity, $m
  1,603
  1,946
  2,478
  3,103
  3,821
  4,636
  5,549
  6,561
  7,670
  8,876
  10,175
  11,569
  13,050
  14,620
  16,277
  18,018
  19,843
  21,751
  23,741
  25,816
  27,975
  30,221
  32,555
  34,981
  37,502
  40,122
  42,846
  45,677
  48,622
  51,687
  54,878
Debt-to-equity ratio
  0.055
  0.140
  0.190
  0.230
  0.260
  0.280
  0.300
  0.320
  0.330
  0.340
  0.340
  0.350
  0.350
  0.360
  0.360
  0.360
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.380
  0.380
  0.380
  0.380
  0.380
  0.380
  0.380
  0.380
  0.380
Adjusted equity ratio
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -234
  -456
  -578
  -720
  -884
  -1,070
  -1,279
  -1,510
  -1,764
  -2,040
  -2,338
  -2,626
  -2,965
  -3,325
  -3,705
  -4,104
  -4,523
  -4,960
  -5,417
  -5,893
  -6,388
  -6,904
  -7,439
  -7,996
  -8,574
  -9,176
  -9,800
  -10,450
  -11,126
  -11,829
  -12,561
Depreciation, amort., depletion, $m
  53
  70
  80
  93
  107
  123
  141
  161
  183
  207
  233
  229
  259
  290
  323
  357
  393
  431
  471
  512
  555
  599
  645
  694
  744
  795
  849
  906
  964
  1,025
  1,088
Funds from operations, $m
  577
  -387
  -498
  -627
  -777
  -947
  -1,138
  -1,349
  -1,581
  -1,833
  -2,105
  -2,396
  -2,707
  -3,035
  -3,382
  -3,747
  -4,129
  -4,529
  -4,946
  -5,381
  -5,834
  -6,304
  -6,794
  -7,302
  -7,831
  -8,380
  -8,951
  -9,544
  -10,162
  -10,804
  -11,473
Change in working capital, $m
  342
  151
  180
  211
  243
  275
  308
  342
  375
  407
  439
  470
  501
  530
  559
  588
  616
  644
  672
  700
  729
  758
  788
  819
  851
  885
  920
  956
  995
  1,035
  1,077
Cash from operations, $m
  235
  -538
  -678
  -838
  -1,020
  -1,222
  -1,446
  -1,691
  -1,956
  -2,240
  -2,544
  -2,866
  -3,207
  -3,566
  -3,942
  -4,335
  -4,746
  -5,173
  -5,619
  -6,082
  -6,563
  -7,063
  -7,582
  -8,122
  -8,682
  -9,265
  -9,871
  -10,501
  -11,156
  -11,839
  -12,550
Maintenance CAPEX, $m
  0
  -30
  -39
  -49
  -62
  -76
  -92
  -110
  -130
  -152
  -176
  -202
  -229
  -259
  -290
  -323
  -357
  -393
  -431
  -471
  -512
  -555
  -599
  -645
  -694
  -744
  -795
  -849
  -906
  -964
  -1,025
New CAPEX, $m
  -11
  -98
  -116
  -136
  -157
  -178
  -199
  -221
  -242
  -263
  -284
  -304
  -323
  -342
  -361
  -380
  -398
  -416
  -434
  -452
  -471
  -490
  -509
  -529
  -550
  -571
  -594
  -618
  -642
  -668
  -696
Cash from investing activities, $m
  -183
  -128
  -155
  -185
  -219
  -254
  -291
  -331
  -372
  -415
  -460
  -506
  -552
  -601
  -651
  -703
  -755
  -809
  -865
  -923
  -983
  -1,045
  -1,108
  -1,174
  -1,244
  -1,315
  -1,389
  -1,467
  -1,548
  -1,632
  -1,721
Free cash flow, $m
  52
  -665
  -832
  -1,023
  -1,238
  -1,476
  -1,737
  -2,021
  -2,328
  -2,655
  -3,003
  -3,372
  -3,760
  -4,167
  -4,593
  -5,037
  -5,501
  -5,983
  -6,484
  -7,005
  -7,546
  -8,107
  -8,690
  -9,296
  -9,925
  -10,580
  -11,260
  -11,968
  -12,704
  -13,472
  -14,271
Issuance/(repayment) of debt, $m
  -43
  127
  150
  175
  202
  229
  257
  284
  312
  339
  365
  391
  417
  441
  465
  489
  513
  536
  559
  583
  607
  631
  656
  682
  708
  736
  765
  796
  828
  861
  897
Issuance/(repurchase) of shares, $m
  0
  778
  961
  1,169
  1,400
  1,656
  1,936
  2,238
  2,562
  2,907
  3,273
  3,627
  4,031
  4,454
  4,896
  5,356
  5,835
  6,332
  6,848
  7,384
  7,941
  8,518
  9,118
  9,740
  10,387
  11,059
  11,758
  12,486
  13,243
  14,033
  14,855
Cash from financing (excl. dividends), $m  
  -47
  905
  1,111
  1,344
  1,602
  1,885
  2,193
  2,522
  2,874
  3,246
  3,638
  4,018
  4,448
  4,895
  5,361
  5,845
  6,348
  6,868
  7,407
  7,967
  8,548
  9,149
  9,774
  10,422
  11,095
  11,795
  12,523
  13,282
  14,071
  14,894
  15,752
Total cash flow (excl. dividends), $m
  16
  239
  279
  321
  364
  409
  455
  501
  546
  591
  634
  646
  688
  729
  769
  808
  847
  885
  924
  963
  1,002
  1,042
  1,083
  1,126
  1,170
  1,216
  1,264
  1,314
  1,367
  1,422
  1,481
Retained Cash Flow (-), $m
  220
  -778
  -961
  -1,169
  -1,400
  -1,656
  -1,936
  -2,238
  -2,562
  -2,907
  -3,273
  -3,627
  -4,031
  -4,454
  -4,896
  -5,356
  -5,835
  -6,332
  -6,848
  -7,384
  -7,941
  -8,518
  -9,118
  -9,740
  -10,387
  -11,059
  -11,758
  -12,486
  -13,243
  -14,033
  -14,855
Prev. year cash balance distribution, $m
 
  106
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  -433
  -683
  -848
  -1,036
  -1,247
  -1,481
  -1,737
  -2,016
  -2,316
  -2,638
  -2,981
  -3,343
  -3,726
  -4,127
  -4,548
  -4,988
  -5,447
  -5,925
  -6,422
  -6,939
  -7,476
  -8,034
  -8,614
  -9,217
  -9,843
  -10,495
  -11,172
  -11,877
  -12,610
  -13,374
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  -415
  -625
  -738
  -853
  -966
  -1,075
  -1,174
  -1,260
  -1,331
  -1,383
  -1,415
  -1,427
  -1,417
  -1,386
  -1,335
  -1,268
  -1,185
  -1,091
  -989
  -882
  -773
  -667
  -565
  -469
  -383
  -306
  -240
  -184
  -138
  -101
Current shareholders' claim on cash, %
  100
  61.4
  38.4
  24.5
  15.8
  10.4
  6.9
  4.6
  3.1
  2.2
  1.5
  1.0
  0.7
  0.5
  0.4
  0.3
  0.2
  0.1
  0.1
  0.1
  0.1
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

NOW Inc. (NOW) is a global distributor to the oil and gas and industrial markets. The Company operates under the DistributionNOW and Wilson Export brands. Its segments include the United States, Canada and International. As of December 31, 2016, its segments, the United States, Canada and International, had over 200, 55 and 35 locations, respectively. The United States segment comprises United States Energy, United States Supply Chain and United States Process Solutions. NOW's energy product offerings are used in the oil and gas industry, including upstream drilling and completion, exploration and production, midstream infrastructure development and downstream petroleum refining, as well as in other industries, such as chemical processing, power generation and industrial manufacturing operations. It provides supply chain management to drilling contractors, exploration and production (E&P) operators, midstream operators, downstream energy and industrial manufacturing companies.

FINANCIAL RATIOS  of  NOW Inc. (DNOW)

Valuation Ratios
P/E Ratio -5.8
Price to Sales 0.6
Price to Book 1.2
Price to Tangible Book
Price to Cash Flow 5.8
Price to Free Cash Flow 6.1
Growth Rates
Sales Growth Rate -30%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 0%
Cap. Spend. - 3 Yr. Gr. Rate -27.5%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 5.5%
Total Debt to Equity 5.5%
Interest Coverage -57
Management Effectiveness
Return On Assets -13.4%
Ret/ On Assets - 3 Yr. Avg. -10.4%
Return On Total Capital -17%
Ret/ On T. Cap. - 3 Yr. Avg. -13.2%
Return On Equity -18.1%
Return On Equity - 3 Yr. Avg. -13.9%
Asset Turnover 1.2
Profitability Ratios
Gross Margin 16.4%
Gross Margin - 3 Yr. Avg. 17.7%
EBITDA Margin -8.2%
EBITDA Margin - 3 Yr. Avg. -6.4%
Operating Margin -10.5%
Oper. Margin - 3 Yr. Avg. -7.7%
Pre-Tax Margin -10.9%
Pre-Tax Margin - 3 Yr. Avg. -7.9%
Net Profit Margin -11.1%
Net Profit Margin - 3 Yr. Avg. -8.3%
Effective Tax Rate -1.7%
Eff/ Tax Rate - 3 Yr. Avg. 12.1%
Payout Ratio 0%

DNOW stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the DNOW stock intrinsic value calculation we used $2107 million for the last fiscal year's total revenue generated by NOW Inc.. The default revenue input number comes from 2016 income statement of NOW Inc.. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our DNOW stock valuation model: a) initial revenue growth rate of 29.9% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for DNOW is calculated based on our internal credit rating of NOW Inc., is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of NOW Inc..
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of DNOW stock the variable cost ratio is equal to 116.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for DNOW stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 4.6% for NOW Inc..

Corporate tax rate of 27% is the nominal tax rate for NOW Inc.. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the DNOW stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for DNOW are equal to 15.5%.

Life of production assets of 11 years is the average useful life of capital assets used in NOW Inc. operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for DNOW is equal to 24%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $1183 million for NOW Inc. - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 107.34 million for NOW Inc. is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of NOW Inc. at the current share price and the inputted number of shares is $1.4 billion.

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COMPANY NEWS

▶ ETFs with exposure to NOW, Inc. : October 2, 2017   [Oct-02-17 10:48AM  Capital Cube]
▶ NOW, Inc. Value Analysis (NYSE:DNOW) : September 27, 2017   [Sep-27-17 10:50AM  Capital Cube]
▶ ETFs with exposure to NOW, Inc. : August 28, 2017   [Aug-28-17 05:09PM  Capital Cube]
▶ Pete Miller to retire from NOV spinoff   [Aug-24-17 09:00AM  American City Business Journals]
▶ ETFs with exposure to NOW, Inc. : August 16, 2017   [Aug-16-17 05:36PM  Capital Cube]
▶ Now reports 2Q loss   [Aug-02-17 09:23PM  Associated Press]
▶ NOW Inc. Reports Second Quarter 2017 Results   [06:45AM  Business Wire]
▶ ETFs with exposure to NOW, Inc. : July 24, 2017   [Jul-24-17 03:25PM  Capital Cube]
▶ ETFs with exposure to NOW, Inc. : July 14, 2017   [Jul-14-17 01:58PM  Capital Cube]
▶ ETFs with exposure to NOW, Inc. : June 15, 2017   [Jun-15-17 01:44PM  Capital Cube]
▶ 3 Top Oil Stocks to Buy in June   [Jun-08-17 12:14PM  Motley Fool]
▶ ETFs with exposure to NOW, Inc. : June 1, 2017   [Jun-01-17 01:44PM  Capital Cube]
▶ Arnold Schneider Gains New Energy Holdings in 1st Quarter   [May-31-17 12:01PM  GuruFocus.com]
▶ ETFs with exposure to NOW, Inc. : May 16, 2017   [May-16-17 12:50PM  Capital Cube]
▶ 3 Hidden Gems in the Oil Sector   [May-09-17 08:11AM  Motley Fool]
▶ ETFs with exposure to NOW, Inc. : May 3, 2017   [May-03-17 03:50PM  Capital Cube]
▶ Now reports 1Q loss   [06:51AM  Associated Press]
▶ NOW Inc. Reports First Quarter 2017 Results   [06:45AM  Business Wire]
▶ NOW, Inc. Value Analysis (NYSE:DNOW) : May 1, 2017   [May-01-17 04:56PM  Capital Cube]
▶ ETFs with exposure to NOW, Inc. : April 21, 2017   [Apr-21-17 02:52PM  Capital Cube]
▶ ETFs with exposure to NOW, Inc. : April 5, 2017   [Apr-05-17 04:38PM  Capital Cube]
▶ 3 Little-Known Energy Companies to Put on Your Radar   [Mar-31-17 02:42PM  Motley Fool]
▶ Now reports 4Q loss   [07:00AM  Associated Press]
▶ NOW Inc (DNOW): Are Hedge Funds Right About This Stock?   [Dec-05-16 12:49PM  at Insider Monkey]
▶ NOW Inc. Announces Distributorship Agreements   [Nov-07-16 06:45AM  Business Wire]
▶ NOW Incs Results Bounce Off the Bottom   [05:00PM  at Motley Fool]
▶ 3 Unheard-Of Stocks That Are Fantastic Buys Right Now   [Oct-04-16 05:47PM  at Motley Fool]
▶ Shares of NOW Inc. Surged Ahead 15% in August -- Here's Why   [Sep-07-16 01:51PM  at Motley Fool]
Financial statements of DNOW
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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