Intrinsic value of National Oilwell Varco, Inc. - NOV

Previous Close

$18.64

  Intrinsic Value

$43.68

stock screener

  Rating & Target

str. buy

+134%

Previous close

$18.64

 
Intrinsic value

$43.68

 
Up/down potential

+134%

 
Rating

str. buy

We calculate the intrinsic value of NOV 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 0001), $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 7.1

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  12.60
  11.84
  11.16
  10.54
  9.99
  9.49
  9.04
  8.64
  8.27
  7.94
  7.65
  7.38
  7.15
  6.93
  6.74
  6.56
  6.41
  6.27
  6.14
  6.03
  5.92
  5.83
  5.75
  5.67
  5.61
  5.55
  5.49
  5.44
  5.40
  5.36
Revenue, $m
  15,016
  16,794
  18,668
  20,636
  22,696
  24,850
  27,096
  29,435
  31,870
  34,402
  37,034
  39,769
  42,611
  45,565
  48,635
  51,828
  55,149
  58,606
  62,204
  65,953
  69,860
  73,934
  78,184
  82,620
  87,252
  92,091
  97,147
  102,434
  107,963
  113,748
Variable operating expenses, $m
  10,124
  11,213
  12,360
  13,565
  14,827
  16,146
  17,521
  18,954
  20,445
  21,996
  22,679
  24,354
  26,094
  27,903
  29,783
  31,739
  33,772
  35,889
  38,093
  40,389
  42,781
  45,276
  47,879
  50,595
  53,432
  56,395
  59,491
  62,729
  66,115
  69,657
Fixed operating expenses, $m
  4,214
  4,306
  4,401
  4,498
  4,597
  4,698
  4,801
  4,907
  5,015
  5,125
  5,238
  5,353
  5,471
  5,591
  5,714
  5,840
  5,969
  6,100
  6,234
  6,371
  6,512
  6,655
  6,801
  6,951
  7,104
  7,260
  7,420
  7,583
  7,750
  7,920
Total operating expenses, $m
  14,338
  15,519
  16,761
  18,063
  19,424
  20,844
  22,322
  23,861
  25,460
  27,121
  27,917
  29,707
  31,565
  33,494
  35,497
  37,579
  39,741
  41,989
  44,327
  46,760
  49,293
  51,931
  54,680
  57,546
  60,536
  63,655
  66,911
  70,312
  73,865
  77,577
Operating income, $m
  678
  1,275
  1,906
  2,572
  3,272
  4,006
  4,773
  5,574
  6,410
  7,281
  9,117
  10,062
  11,046
  12,070
  13,137
  14,249
  15,408
  16,616
  17,877
  19,193
  20,567
  22,003
  23,504
  25,074
  26,717
  28,436
  30,236
  32,122
  34,098
  36,170
EBITDA, $m
  2,088
  2,741
  3,433
  4,161
  4,927
  5,730
  6,569
  7,445
  8,359
  9,311
  10,303
  11,335
  12,410
  13,529
  14,695
  15,909
  17,174
  18,493
  19,869
  21,305
  22,805
  24,371
  26,008
  27,720
  29,511
  31,385
  33,347
  35,402
  37,556
  39,813
Interest expense (income), $m
  101
  146
  187
  230
  275
  323
  373
  425
  479
  536
  595
  656
  720
  786
  855
  926
  1,000
  1,078
  1,158
  1,242
  1,329
  1,419
  1,514
  1,613
  1,715
  1,823
  1,935
  2,052
  2,174
  2,302
  2,436
Earnings before tax, $m
  532
  1,088
  1,676
  2,297
  2,949
  3,633
  4,348
  5,095
  5,874
  6,686
  8,461
  9,342
  10,260
  11,215
  12,211
  13,249
  14,330
  15,458
  16,636
  17,864
  19,148
  20,489
  21,892
  23,359
  24,894
  26,501
  28,184
  29,948
  31,796
  33,734
Tax expense, $m
  144
  294
  453
  620
  796
  981
  1,174
  1,376
  1,586
  1,805
  2,284
  2,522
  2,770
  3,028
  3,297
  3,577
  3,869
  4,174
  4,492
  4,823
  5,170
  5,532
  5,911
  6,307
  6,721
  7,155
  7,610
  8,086
  8,585
  9,108
Net income, $m
  388
  794
  1,224
  1,677
  2,153
  2,652
  3,174
  3,719
  4,288
  4,881
  6,176
  6,820
  7,490
  8,187
  8,914
  9,672
  10,461
  11,285
  12,144
  13,041
  13,978
  14,957
  15,981
  17,052
  18,173
  19,346
  20,575
  21,862
  23,211
  24,626

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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 assets, $m
  22,279
  24,917
  27,697
  30,616
  33,674
  36,869
  40,201
  43,673
  47,285
  51,042
  54,946
  59,004
  63,221
  67,603
  72,159
  76,896
  81,824
  86,952
  92,291
  97,853
  103,650
  109,695
  116,000
  122,582
  129,454
  136,633
  144,136
  151,979
  160,183
  168,765
Adjusted assets (=assets-cash), $m
  22,279
  24,917
  27,697
  30,616
  33,674
  36,869
  40,201
  43,673
  47,285
  51,042
  54,946
  59,004
  63,221
  67,603
  72,159
  76,896
  81,824
  86,952
  92,291
  97,853
  103,650
  109,695
  116,000
  122,582
  129,454
  136,633
  144,136
  151,979
  160,183
  168,765
Revenue / Adjusted assets
  0.674
  0.674
  0.674
  0.674
  0.674
  0.674
  0.674
  0.674
  0.674
  0.674
  0.674
  0.674
  0.674
  0.674
  0.674
  0.674
  0.674
  0.674
  0.674
  0.674
  0.674
  0.674
  0.674
  0.674
  0.674
  0.674
  0.674
  0.674
  0.674
  0.674
Average production assets, $m
  8,559
  9,573
  10,641
  11,762
  12,937
  14,164
  15,445
  16,778
  18,166
  19,609
  21,109
  22,668
  24,288
  25,972
  27,722
  29,542
  31,435
  33,405
  35,456
  37,593
  39,820
  42,142
  44,565
  47,093
  49,734
  52,492
  55,374
  58,387
  61,539
  64,836
Working capital, $m
  3,964
  4,434
  4,928
  5,448
  5,992
  6,560
  7,153
  7,771
  8,414
  9,082
  9,777
  10,499
  11,249
  12,029
  12,840
  13,683
  14,559
  15,472
  16,422
  17,412
  18,443
  19,519
  20,641
  21,812
  23,035
  24,312
  25,647
  27,043
  28,502
  30,029
Total debt, $m
  3,462
  4,259
  5,099
  5,980
  6,904
  7,868
  8,875
  9,923
  11,014
  12,149
  13,328
  14,553
  15,827
  17,150
  18,526
  19,957
  21,445
  22,993
  24,606
  26,286
  28,036
  29,862
  31,766
  33,754
  35,829
  37,997
  40,263
  42,632
  45,109
  47,701
Total liabilities, $m
  6,728
  7,525
  8,365
  9,246
  10,170
  11,134
  12,141
  13,189
  14,280
  15,415
  16,594
  17,819
  19,093
  20,416
  21,792
  23,223
  24,711
  26,259
  27,872
  29,552
  31,302
  33,128
  35,032
  37,020
  39,095
  41,263
  43,529
  45,898
  48,375
  50,967
Total equity, $m
  15,551
  17,392
  19,333
  21,370
  23,504
  25,734
  28,061
  30,484
  33,005
  35,627
  38,353
  41,185
  44,128
  47,187
  50,367
  53,673
  57,113
  60,692
  64,419
  68,302
  72,348
  76,567
  80,968
  85,562
  90,359
  95,370
  100,607
  106,082
  111,808
  117,798
Total liabilities and equity, $m
  22,279
  24,917
  27,698
  30,616
  33,674
  36,868
  40,202
  43,673
  47,285
  51,042
  54,947
  59,004
  63,221
  67,603
  72,159
  76,896
  81,824
  86,951
  92,291
  97,854
  103,650
  109,695
  116,000
  122,582
  129,454
  136,633
  144,136
  151,980
  160,183
  168,765
Debt-to-equity ratio
  0.220
  0.240
  0.260
  0.280
  0.290
  0.310
  0.320
  0.330
  0.330
  0.340
  0.350
  0.350
  0.360
  0.360
  0.370
  0.370
  0.380
  0.380
  0.380
  0.380
  0.390
  0.390
  0.390
  0.390
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
Adjusted equity ratio
  0.698
  0.698
  0.698
  0.698
  0.698
  0.698
  0.698
  0.698
  0.698
  0.698
  0.698
  0.698
  0.698
  0.698
  0.698
  0.698
  0.698
  0.698
  0.698
  0.698
  0.698
  0.698
  0.698
  0.698
  0.698
  0.698
  0.698
  0.698
  0.698
  0.698

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  388
  794
  1,224
  1,677
  2,153
  2,652
  3,174
  3,719
  4,288
  4,881
  6,176
  6,820
  7,490
  8,187
  8,914
  9,672
  10,461
  11,285
  12,144
  13,041
  13,978
  14,957
  15,981
  17,052
  18,173
  19,346
  20,575
  21,862
  23,211
  24,626
Depreciation, amort., depletion, $m
  1,409
  1,466
  1,526
  1,589
  1,655
  1,724
  1,796
  1,871
  1,949
  2,030
  1,186
  1,273
  1,365
  1,459
  1,557
  1,660
  1,766
  1,877
  1,992
  2,112
  2,237
  2,368
  2,504
  2,646
  2,794
  2,949
  3,111
  3,280
  3,457
  3,642
Funds from operations, $m
  1,798
  2,260
  2,750
  3,266
  3,808
  4,376
  4,970
  5,590
  6,237
  6,911
  7,362
  8,093
  8,854
  9,646
  10,472
  11,331
  12,227
  13,161
  14,136
  15,153
  16,215
  17,325
  18,485
  19,698
  20,967
  22,295
  23,685
  25,142
  26,669
  28,269
Change in working capital, $m
  444
  469
  495
  519
  544
  568
  593
  618
  643
  668
  695
  722
  750
  780
  811
  843
  877
  913
  950
  990
  1,031
  1,076
  1,122
  1,171
  1,223
  1,277
  1,335
  1,396
  1,460
  1,527
Cash from operations, $m
  1,354
  1,791
  2,255
  2,747
  3,264
  3,808
  4,377
  4,973
  5,594
  6,243
  6,668
  7,371
  8,104
  8,867
  9,661
  10,488
  11,350
  12,249
  13,186
  14,163
  15,184
  16,249
  17,363
  18,526
  19,744
  21,017
  22,350
  23,746
  25,209
  26,741
Maintenance CAPEX, $m
  -427
  -481
  -538
  -598
  -661
  -727
  -796
  -868
  -943
  -1,021
  -1,102
  -1,186
  -1,273
  -1,365
  -1,459
  -1,557
  -1,660
  -1,766
  -1,877
  -1,992
  -2,112
  -2,237
  -2,368
  -2,504
  -2,646
  -2,794
  -2,949
  -3,111
  -3,280
  -3,457
New CAPEX, $m
  -957
  -1,013
  -1,068
  -1,122
  -1,175
  -1,227
  -1,280
  -1,334
  -1,388
  -1,443
  -1,500
  -1,559
  -1,620
  -1,684
  -1,750
  -1,820
  -1,893
  -1,970
  -2,051
  -2,137
  -2,227
  -2,322
  -2,423
  -2,528
  -2,640
  -2,758
  -2,882
  -3,013
  -3,152
  -3,297
Cash from investing activities, $m
  -1,384
  -1,494
  -1,606
  -1,720
  -1,836
  -1,954
  -2,076
  -2,202
  -2,331
  -2,464
  -2,602
  -2,745
  -2,893
  -3,049
  -3,209
  -3,377
  -3,553
  -3,736
  -3,928
  -4,129
  -4,339
  -4,559
  -4,791
  -5,032
  -5,286
  -5,552
  -5,831
  -6,124
  -6,432
  -6,754
Free cash flow, $m
  -30
  297
  650
  1,027
  1,429
  1,853
  2,301
  2,771
  3,264
  3,779
  4,066
  4,626
  5,210
  5,818
  6,452
  7,111
  7,798
  8,513
  9,258
  10,035
  10,845
  11,690
  12,573
  13,494
  14,458
  15,465
  16,519
  17,622
  18,777
  19,987
Issuance/(repayment) of debt, $m
  751
  797
  839
  882
  923
  965
  1,006
  1,048
  1,091
  1,134
  1,179
  1,225
  1,273
  1,323
  1,376
  1,431
  1,488
  1,549
  1,613
  1,680
  1,751
  1,825
  1,904
  1,988
  2,075
  2,168
  2,266
  2,369
  2,477
  2,592
Issuance/(repurchase) of shares, $m
  1,344
  1,047
  716
  361
  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 from financing (excl. dividends), $m  
  2,095
  1,844
  1,555
  1,243
  923
  965
  1,006
  1,048
  1,091
  1,134
  1,179
  1,225
  1,273
  1,323
  1,376
  1,431
  1,488
  1,549
  1,613
  1,680
  1,751
  1,825
  1,904
  1,988
  2,075
  2,168
  2,266
  2,369
  2,477
  2,592
Total cash flow (excl. dividends), $m
  2,065
  2,140
  2,206
  2,270
  2,352
  2,818
  3,308
  3,820
  4,355
  4,913
  5,245
  5,852
  6,484
  7,142
  7,827
  8,542
  9,286
  10,061
  10,870
  11,714
  12,595
  13,515
  14,477
  15,482
  16,533
  17,633
  18,785
  19,991
  21,255
  22,579
Retained Cash Flow (-), $m
  -1,732
  -1,841
  -1,940
  -2,038
  -2,134
  -2,230
  -2,326
  -2,423
  -2,521
  -2,622
  -2,725
  -2,832
  -2,943
  -3,059
  -3,180
  -3,306
  -3,440
  -3,580
  -3,727
  -3,882
  -4,046
  -4,219
  -4,401
  -4,594
  -4,797
  -5,011
  -5,237
  -5,475
  -5,726
  -5,991
Prev. year cash balance distribution, $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 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
  333
  299
  265
  232
  218
  588
  981
  1,397
  1,833
  2,291
  2,520
  3,019
  3,540
  4,083
  4,648
  5,235
  5,846
  6,482
  7,143
  7,832
  8,549
  9,296
  10,075
  10,888
  11,736
  12,622
  13,548
  14,516
  15,529
  16,588
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
  319
  274
  231
  191
  169
  427
  663
  873
  1,053
  1,201
  1,196
  1,288
  1,346
  1,371
  1,364
  1,330
  1,272
  1,194
  1,100
  995
  884
  771
  660
  555
  457
  368
  291
  225
  170
  125
Current shareholders' claim on cash, %
  87.8
  80.1
  75.6
  73.7
  73.7
  73.7
  73.7
  73.7
  73.7
  73.7
  73.7
  73.7
  73.7
  73.7
  73.7
  73.7
  73.7
  73.7
  73.7
  73.7
  73.7
  73.7
  73.7
  73.7
  73.7
  73.7
  73.7
  73.7
  73.7
  73.7

National Oilwell Varco, Inc. is an oilfield equipment manufacturer and technology provider. The Company operates through four segments: Rig Systems, Rig Aftermarket, Wellbore Technologies and Completion & Production Solutions. The Rig Systems segment makes and supports the capital equipment and integrated systems needed to drill oil and gas wells on land and offshore. The Rig Systems segment designs, manufactures and sells land rigs, offshore drilling equipment packages, and drilling rig components. The Rig Aftermarket segment provides aftermarket products and services to support a large installed base of land and offshore rigs, and drilling rig components manufactured by the Company's Rig Systems segment. The Wellbore Technologies segment designs, manufactures, rents and sells a range of equipment and technologies used to perform drilling operations. The Completion & Production Solutions segment integrates technologies for well completions and oil and gas production.

FINANCIAL RATIOS  of  National Oilwell Varco, Inc. (NOV)

Valuation Ratios
P/E Ratio -2.9
Price to Sales 1
Price to Book 0.5
Price to Tangible Book
Price to Cash Flow 7.4
Price to Free Cash Flow 10.4
Growth Rates
Sales Growth Rate -50.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -37.3%
Cap. Spend. - 3 Yr. Gr. Rate -14.3%
Financial Strength
Quick Ratio 3
Current Ratio 0.2
LT Debt to Equity 19.4%
Total Debt to Equity 23.1%
Interest Coverage -25
Management Effectiveness
Return On Assets -9.8%
Ret/ On Assets - 3 Yr. Avg. -1.5%
Return On Total Capital -12.9%
Ret/ On T. Cap. - 3 Yr. Avg. -2.1%
Return On Equity -15.9%
Return On Equity - 3 Yr. Avg. -2.8%
Asset Turnover 0.3
Profitability Ratios
Gross Margin -1.4%
Gross Margin - 3 Yr. Avg. 15.5%
EBITDA Margin -25.1%
EBITDA Margin - 3 Yr. Avg. -1%
Operating Margin -33.3%
Oper. Margin - 3 Yr. Avg. -6.3%
Pre-Tax Margin -36.2%
Pre-Tax Margin - 3 Yr. Avg. -8%
Net Profit Margin -33.3%
Net Profit Margin - 3 Yr. Avg. -8.9%
Effective Tax Rate 7.9%
Eff/ Tax Rate - 3 Yr. Avg. 2.5%
Payout Ratio -9.5%

NOV stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the NOV stock intrinsic value calculation we used $13336 million for the last fiscal year's total revenue generated by National Oilwell Varco, Inc.. The default revenue input number comes from 0001 income statement of National Oilwell Varco, 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 NOV stock valuation model: a) initial revenue growth rate of 12.6% 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 NOV is calculated based on our internal credit rating of National Oilwell Varco, 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 National Oilwell Varco, 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 NOV stock the variable cost ratio is equal to 68.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $4123 million in the base year in the intrinsic value calculation for NOV 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 5.4% for National Oilwell Varco, Inc..

Corporate tax rate of 27% is the nominal tax rate for National Oilwell Varco, 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 NOV 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 NOV are equal to 57%.

Life of production assets of 17.8 years is the average useful life of capital assets used in National Oilwell Varco, 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 NOV is equal to 26.4%. 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 - $13819 million for National Oilwell Varco, 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 383.308 million for National Oilwell Varco, 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 National Oilwell Varco, Inc. at the current share price and the inputted number of shares is $7.1 billion.

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