Key Takeaways EV-to-EBITDA offers a fuller view of valuation by accounting for debt, unlike traditional P/E ratios.PAGP, DNOW, ROCK, MLR and SBH are screened as value stocks with low EV-to-EBITDA ratios.Each stock meets strict criteria, including valuation, trading volume, price, growth, and Value Score.The price-to-earnings (P/E) multiple enjoys widespread popularity among investors seeking stocks trading at a bargain. In addition to being a widely used tool for screening stocks, P/E is a popular metric fo ...

I am beginning to get bullish on DNOW, Inc. ( DNOW ). Why? Because the MRC infusion will change its momentum in an otherwise stale market. I mean, look at the investors’ reactions - a 10% stock price jump over the pastI have more than 14 years of experience in analyzing and writing on stocks. I write on both long and short sides in an unbiased manner. I have been covering the energy sectors for the past 7 years, with the primary focus on the oilfield equipment services sector. I also cover the Industrial Su ...

Core Insights - The article emphasizes the importance of strong foundational companies in the technology, industrial, and conglomerate sectors for long-term success [1] Group 1: Company Focus - Companies with robust financials and strategic approaches are highlighted as having the potential for sustained performance [1] - The analysis combines financial metrics with narrative storytelling to provide a comprehensive understanding of market dynamics [1] Group 2: Industry Perspective - The focus on technology, industrial, and conglomerate sectors indicates a targeted interest in industries that are likely to drive future growth [1]

Core Insights - The article emphasizes the importance of strong foundational companies in the technology, industrial, and conglomerate sectors for long-term success [1] Group 1: Company Focus - Companies with robust financials and strategic narratives are highlighted as favorable investment opportunities [1] - The analysis combines financial metrics with storytelling to provide insights into market performance [1] Group 2: Industry Perspective - The technology, industrial, and conglomerate sectors are identified as key areas of interest for investment analysis [1]

Group 1 - Dnow Inc. shares are currently trading at $14.27, reflecting a 0.71% increase, with a 13.52% rise over the past month, but a 1.04% decrease over the past year [1] - The P/E ratio is a critical metric for investors, comparing the current share price to the company's EPS, indicating market expectations for future performance [5] - Dnow has a lower P/E ratio compared to the industry average of 22.78 for Trading Companies & Distributors, suggesting potential undervaluation despite possible concerns about performance [6] Group 2 - A low P/E ratio can indicate undervaluation but may also reflect weak growth prospects or financial instability, necessitating a cautious approach [8] - The P/E ratio should be considered alongside other financial metrics, industry trends, and qualitative factors for a comprehensive analysis of a company's financial health [9]

Core Insights - ServiceNow (NOW) is enhancing its collaboration with Microsoft (MSFT) through new integrations aimed at improving orchestration, governance, and collaboration across AI agents and workflows [1][2] - The partnership will connect ServiceNow's AI Platform with Microsoft 365, Copilot, Foundry, and GitHub, facilitating better management of autonomous AI agents [1][2] - ServiceNow has raised its subscription revenue guidance for 2025 to between $12.835 billion and $12.845 billion, indicating a 20% growth on a non-GAAP constant currency basis [3] Integration and Collaboration - The integration of NOW's AI Control Tower with Microsoft Foundry and Copilot Studio will enable automatic governance across AI agents on Microsoft platforms [2] - ServiceNow Build Agent's integration with GitHub allows secure access to GitHub issues, pull requests, and discussions [2] - Upcoming integration of Now Assist with Microsoft Agent 365 will bring enterprise workflows into Microsoft Word, Outlook, and Teams [2] Competitive Landscape - ServiceNow faces significant competition from Atlassian (TEAM) and Salesforce (CRM), both of which are enhancing their subscription-based solutions and AI capabilities [4][5] - Atlassian has seen a CAGR of approximately 40% in its subscription segment from fiscal 2020 to fiscal 2025, driven by demand for automated communication systems [4] - Salesforce reported a 140% year-over-year increase in Data Cloud customer adoption, indicating strong demand for AI tools that enhance enterprise workflows [5] Financial Performance and Valuation - ServiceNow's stock has declined by 24.6% year to date, underperforming the broader Zacks Computer and Technology sector, which has returned 25.9% [6] - The forward 12-month price/sales ratio for NOW is 10.83X, significantly higher than the sector average of 6.61X, suggesting that the stock may be overvalued [9] - The Zacks Consensus Estimate for fourth-quarter 2025 earnings is $4.35 per share, reflecting an 18.53% year-over-year growth [11]

Core Insights - The performance of DNOW's international operations is critical for understanding its financial resilience and growth potential [1][2][3] Revenue Performance - DNOW's total revenue for the quarter was $634 million, reflecting a 4.6% increase from the previous year [4] - Canada generated $53 million in revenue, accounting for 8.4% of total revenue, which was a decrease of 4.93% from the expected $55.75 million [5] - International revenue contributed $54 million, representing 8.5% of total revenue, also falling short of the expected $56.25 million by 4% [6] Future Projections - Analysts project DNOW's revenue for the ongoing fiscal quarter to be $603.35 million, a 5.7% increase year-over-year, with Canada and International expected to contribute $55.9 million (9.3%) and $57.5 million (9.5%) respectively [7] - For the full year, total revenue is projected at $2.47 billion, a 4% increase from last year, with Canada and International expected to contribute $220.2 million (8.9%) and $228.45 million (9.3%) respectively [8] Market Dynamics - The reliance on global markets presents both opportunities and challenges for DNOW, making the analysis of international revenue trends essential for forecasting future performance [9][10] - The intricacies of global interdependence and geopolitical factors are closely monitored by analysts to adjust earnings forecasts [10]

Core Insights - Companies generating cash are not necessarily good investments if they fail to reinvest wisely, which can limit their growth potential [1] Group 1: Nike (NKE) - Nike has a trailing 12-month free cash flow margin of 6.5% and is a major player in athletic footwear and apparel [2] - The stock is currently trading at $61.93 per share, with a forward P/E ratio of 32.9 [4] Group 2: DistributionNOW (DNOW) - DistributionNOW has a trailing 12-month free cash flow margin of 7.3% and provides supply chain solutions for energy and industrial markets [5] - The stock price is $13.57, reflecting a valuation ratio of 32.7x forward EV-to-EBITDA [7] Group 3: General Motors (GM) - General Motors has a trailing 12-month free cash flow margin of 7.9% and offers a variety of vehicle brands [8] - The stock trades at $69.03 per share, with a forward P/E ratio of 6.3 [13] - Recent performance indicators show muted revenue growth of 2.5% annually over the last two years, suggesting demand issues [10] - Future growth is projected to be soft, with Wall Street estimates indicating only 3.7% growth [11] - The company faces challenges with a projected sales decline of 1.4% over the next year and high production costs reflected in a gross margin of 12% [12]

Core Insights - DistributionNOW's shares fell 8.1% following the release of its third-quarter 2025 financial results, which indicated a significant drop in profitability, raising investor concerns [1][2] - Although the earnings per share of $0.26 exceeded analyst expectations, revenue of $634 million fell short of the anticipated $635.13 million, and the net profit margin decreased sharply to 3.4% from 9.5% year-over-year [2] - The company's free cash flow margin also declined to 6.2% from 11.9% in the same quarter of the previous year, indicating contracting profitability [2] Market Reaction - The stock market's reaction to DistributionNOW's news reflects its volatility, with 16 moves greater than 5% over the past year, suggesting that while the news is significant, it may not fundamentally alter the market's perception of the company [4] - The previous notable stock movement occurred 27 days ago when the stock dropped 4.4% due to tariff threats from the U.S. against China, which raised concerns about global supply chain disruptions and increased material costs for manufacturers [5] Stock Performance - Year-to-date, DistributionNOW's shares are up 4.4%, but they are still trading 23.2% below their 52-week high of $17.59 from February 2025, currently priced at $13.52 per share [6] - An investment of $1,000 in DistributionNOW's shares five years ago would now be worth $2,932, indicating a significant long-term growth despite recent volatility [6]

Core Viewpoint - DNOW Inc. has successfully completed its acquisition of MRC Global Inc., creating a leading solutions provider in the energy and industrial markets [1][11]. Company Overview - DNOW is a premier energy and industrial solutions provider with over 160 years of experience, specializing in the distribution of pipe, valves, fittings, pumps, and fabricated equipment [5]. - The company is headquartered in Houston, Texas, employing approximately 5,000 individuals and operating a global network of distribution and engineering locations [5]. Merger Details - Under the merger agreement, each share of MRC Global's common stock was converted into the right to receive 0.9489 shares of DNOW's common stock [2]. - The total value of the all-stock transaction is approximately $1.5 billion, which includes MRC Global's net debt [13]. Strategic Benefits - The merger is expected to enhance DNOW's earnings durability, cash flow, and financial position, allowing the company to capitalize on growth opportunities across various sectors [3]. - DNOW anticipates generating $70 million in annual cost synergies within three years post-merger through operational efficiencies and streamlined corporate structures [6]. Market Position and Growth Opportunities - The combined entity will serve a broader mix of customers in essential energy infrastructure, including sectors such as chemical processing, municipal water, utilities, mining, and power generation [6]. - The merger expands DNOW's geographic footprint and distribution presence across the U.S., Canada, and other international markets, with over 350 service and distribution locations in more than 20 countries [6].