Group 1 - DNOW Inc. is merging with MRC Global to create a dominant industrial distributor in North America, with DNOW shareholders receiving 57% and MRC shareholders 43% of the combined company [2] - The merger is expected to close in the fourth quarter, resulting in a company valued at $2.6 billion with $200 million in net debt, which management plans to reduce over the next year [2] - The combined entity is positioned to benefit from growth in alternative energy, data center infrastructure, and mining, while achieving operational and purchasing synergies [3][4] Group 2 - Both DNOW and MRC have improved their business models over the past decade, focusing on higher-margin products and integrated supply chain solutions, with DNOW transitioning from distribution to purpose-built solutions [4] - The merger is expected to create significant cost synergies and revenue enhancements, providing a strong platform for future mergers and acquisitions or share repurchases [5] - The combined business trades at a discount relative to peers, with a conservative synergy estimate of $70 million, indicating a compelling investment opportunity [3][5]

Technical Analysis - DNOW has recently reached a key level of support and has overtaken the 20-day moving average, indicating a short-term bullish trend [1] - The 20-day simple moving average is favored by traders as it smooths out price fluctuations and provides trend reversal signals [2] Performance Metrics - Over the past four weeks, DNOW shares have increased by 5.6% [4] - The company currently holds a Zacks Rank 2 (Buy), suggesting potential for continued price appreciation [4] Earnings Estimates - There have been two upward revisions in earnings estimates for the current fiscal year, with no downward revisions, leading to an increase in the consensus estimate [4] - The positive revisions in earnings estimates strengthen the bullish outlook for DNOW [4] Investment Consideration - Given the technical indicators and positive earnings estimate revisions, DNOW is recommended for inclusion on investors' watchlists [5]

Core Viewpoint - Momentum investing focuses on "buying high and selling higher" rather than traditional strategies of "buying low and selling high" [1] Group 1: Momentum Investing Strategy - Momentum investors often face challenges in determining the right entry point for fast-moving stocks, which can lead to limited upside or downside risks [2] - Investing in bargain stocks that exhibit recent price momentum can be a safer strategy, utilizing tools like the Zacks Momentum Style Score to identify potential opportunities [3] Group 2: DNOW Stock Analysis - DNOW has shown a four-week price change of 9.8%, indicating growing investor interest and positioning it well within the momentum investing framework [4] - The stock has gained 1.9% over the past 12 weeks and has a beta of 1.21, suggesting it moves 21% more than the market in either direction [5] - DNOW holds a Momentum Score of B, indicating a favorable time to invest based on momentum [6] Group 3: Earnings and Valuation - An upward trend in earnings estimate revisions has contributed to DNOW's Zacks Rank 2 (Buy), which is associated with strong momentum effects [7] - DNOW is trading at a Price-to-Sales ratio of 0.70, suggesting it is undervalued at 70 cents for each dollar of sales, providing room for growth [7] Group 4: Additional Opportunities - Besides DNOW, there are other stocks that meet the criteria of the 'Fast-Paced Momentum at a Bargain' screen, presenting additional investment opportunities [8] - Various Zacks Premium Screens are available to assist in identifying winning stock picks based on different investing styles [9]

Group 1 - DNOW, Inc. is accelerating diversification, with midstream now representing a larger share of its operations [1] - The analyst has over 14 years of experience in stock analysis, focusing on both long and short positions [1] - The primary focus of the analysis is on the energy sectors, particularly the oilfield equipment services sector [1] Group 2 - The analyst also covers the Industrial Supply industry and occasionally collaborates with other contributors [1]

Core Insights - ServiceNow (NOW) is experiencing strong growth, with Q2 2025 revenues reaching $3.22 billion, a 22.4% increase year over year [1][10] - The company has raised its subscription revenue guidance for 2025 to between $12.775 billion and $12.795 billion, indicating a growth rate of 19.5-20% on a non-GAAP constant currency basis [5][10] Partner Ecosystem - ServiceNow's extensive partner network includes major companies like NVIDIA, Cisco, Amazon, and others, which enhances its innovative portfolio and drives top-line growth [1][3] - The collaboration with NVIDIA focuses on using AI to improve employee support and decision-making through the development of the Apriel Nemotron 15B model [2] - Partnerships with Amazon Web Services and Cisco aim to eliminate enterprise silos and enhance AI risk management, respectively [3] Workflow and Deal Performance - In Q2 2025, ServiceNow secured 40 technology workflow deals worth over $1 million, with significant contributions from ITSM, ITOM, ITAM, security, and risk sectors [4] - The company’s CRM and industry workflows were involved in 17 of the top 20 deals, indicating strong demand for its solutions [4] Competitive Landscape - ServiceNow faces intense competition from Atlassian and Salesforce, both of which are expanding their market presence through innovative solutions and integrations [6][7][8] - Atlassian has seen a 20-fold increase in AI interactions, while Salesforce continues to unify enterprise workflows through its Customer 360 architecture [7][8] Valuation and Stock Performance - ServiceNow's stock has underperformed, dropping 13.4% year to date, compared to a 12.9% return for the broader Zacks Computer and Technology sector [11] - The company's forward price/sales ratio stands at 12.94X, significantly higher than the sector average of 6.62X, indicating potential overvaluation [14]

Core Viewpoint - The proposed sale of MRC Global Inc. to DNOW Inc. is under investigation to assess whether the transaction adequately values MRC Global and the process leading to this valuation is appropriate [1]. Group 1 - MRC Global shareholders will receive 0.9489 shares of DNOW for each share of MRC they own as part of the proposed transaction [1]. - Kahn Swick & Foti, LLC is investigating the adequacy of the consideration offered to MRC Global shareholders [1]. - The investigation aims to determine if the proposed sale undervalues MRC Global [1].

Core Viewpoint - DNOW (DNOW) has reached a significant support level and shows potential for investors from a technical perspective, having recently broken through the 200-day moving average, indicating a long-term bullish trend [1]. Technical Analysis - The 200-day simple moving average is a valuable tool for establishing long-term market trends for various financial instruments, including stocks [2]. - Over the past four weeks, DNOW has gained 9.7%, and it is currently ranked as a Zacks Rank 1 (Strong Buy), suggesting further upward movement for the stock [2]. Earnings Estimates - Recent earnings estimate revisions for DNOW show one upward revision compared to no downward revisions for the current fiscal year, with the consensus estimate also moving up [3]. - The combination of positive earnings estimate revisions and favorable technical indicators suggests that DNOW may present additional gains for investors in the near future [3].

Core Viewpoint - The analysis of DNOW's international revenue trends is crucial for understanding its financial resilience and growth prospects, especially given its global presence in the energy and industrial distribution sector [1][2][3]. Group 1: Financial Performance - DNOW's total revenue for the quarter was $628 million, reflecting a decrease of 0.8% compared to the same quarter last year [4]. - Revenue from Canada was $48 million, which is 7.6% of total revenue, and this was a surprise decrease of 7.96% from the projected $52.15 million [5]. - International revenue contributed $52 million, accounting for 8.3% of total revenue, which was also below the consensus estimate of $55.6 million, representing a surprise of -6.48% [6]. Group 2: Revenue Trends and Predictions - Analysts project DNOW will achieve revenues of $636.2 million for the ongoing fiscal quarter, a 5% increase from the previous year, with expected contributions from Canada and International at $58.5 million (9.2%) and $61.2 million (9.6%) respectively [7]. - For the full year, total revenue is expected to reach $2.46 billion, up 3.8% from the previous year, with Canada and International revenues projected to be $229.95 million (9.3%) and $238.85 million (9.7%) respectively [8]. Group 3: Market Context and Analyst Insights - The reliance on international markets presents both opportunities and risks for DNOW, making it essential to monitor international revenue trends for forecasting the company's future [9]. - Wall Street analysts are closely observing these trends, particularly in light of increasing global interconnections and geopolitical tensions, which can impact earnings predictions [10].

Company Overview - DNOW operates under its own brand and is listed on the New York Stock Exchange with the same ticker symbol [4]. Conference Call Details - The Second Quarter 2025 Earnings Conference Call was held on August 6, 2025, with key participants including the CEO, President, and CFO [3][4]. Leadership Participation - The conference featured Brad Wise, Vice President of Digital Strategy and Investor Relations, along with David Cherechinski, CEO, and Mark Johnson, CFO [3][4].

Core Insights - NOW reported strong financial performance in Q2 2025, with non-GAAP EPS of $0.27, exceeding analyst expectations by 28.2% and GAAP revenue of $628 million, also above estimates [1][5] - The company achieved record EBITDA of $51 million, marking a 2% increase year-over-year, despite a slight decline in GAAP revenue compared to Q2 2024 [2][5] - Free cash flow reached $41 million, a significant increase of 115.8% year-over-year, indicating robust cash generation capabilities [2][6] Financial Performance - Non-GAAP EPS for Q2 2025 was $0.27, compared to estimates of $0.21 and $0.25 in Q2 2024, reflecting an 8% year-over-year increase [2][5] - GAAP revenue was reported at $628 million, down 0.8% from $633 million in Q2 2024, but above the estimate of $612.7 million [2][5] - EBITDA (Non-GAAP) was $51 million, representing 8.1% of revenue, a record high for the company [5] - Cash and cash equivalents stood at $232 million, down 9.4% from $256 million year-over-year, with no long-term debt [2][6] Business Overview - NOW operates as an industrial distributor, focusing on supplying pipe, valves, fittings, pumps, and automation control equipment to energy and industrial markets across approximately 165 locations globally [3] - The company is strategically positioned to leverage its distribution network for timely product delivery and is adopting digital solutions like the DigitalNOW platform to enhance procurement and workflow [4] Strategic Focus - The company is emphasizing growth in sustainable and adjacent industrial segments, with a focus on deep customer relationships and effective inventory management [4] - A pending merger with MRC Global is expected to enhance operational capabilities and market reach [4] Regional Performance - U.S. revenue for Q2 2025 was $528 million, an increase from $512 million in Q2 2024, driven by midstream project demand [7] - Canadian and international segments experienced declines due to the absence of one-time project revenue and strategic exits from less profitable regions [7][12] Product and Digital Initiatives - NOW's diversified product portfolio includes traditional offerings and solutions for automation and environmental sustainability, with digital revenue accounting for 53% of SAP-based sales [8][13] - The DigitalNOW platform is a key initiative aimed at improving procurement efficiency and integrating AI for document processing [11] Outlook - Management anticipates flat to high-single-digit percent revenue growth for 2025 compared to 2024, with EBITDA margins expected to approach 8% of revenue [14] - The company is targeting $150 million in free cash flow for 2025, maintaining its forward guidance [14]