Today, DNOW Inc. released its 10-K report, causing its shares to move 19.8% on the market and trade at a price of $11.75.
In the 10-K report, DNOW Inc. reported a net income attributable to the company of $247 million in 2023, a significant increase from $128 million in 2022. The company also reported an EBITDA excluding other costs of $184 million in 2023, up from $175 million in 2022. This resulted in an EBITDA % excluding other costs of 7.9% in 2023, compared to 8.2% in 2022.
In terms of liquidity and capital resources, DNOW Inc. had cash and cash equivalents of $299 million at the end of 2023, compared to $212 million in 2022. The company also repatriated $24 million from its foreign subsidiaries in 2023. DNOW Inc. maintains a $500 million five-year senior secured revolving credit facility, with no borrowings against it as of December 31, 2023, and approximately $493 million in availability.
In the fiscal year 2023, DNOW Inc. reported net cash provided by operating activities of $188 million, compared to nil in 2022. The company also repurchased 4,547,694 shares of its common stock for a total of $50 million in 2023, with approximately $23 million remaining under the program’s authorization as of December 31, 2023.
The effect of the change in exchange rates on cash flows was an increase of $2 million in 2023, compared to a decrease of $4 million in 2022. DNOW Inc. expects capital expenditures for fiscal year 2024 to be approximately $20 million, primarily related to purchases of property, plant, and equipment.
For more information, read the company's full 10-K submission here.
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $3,127 | $2,951 | $1,619 | $1,632 | $2,136 | $2,313 |
| Gross Margins | 20% | 20% | 18% | 22% | 24% | 23% |
| Net Margins | 2% | -3% | -26% | 0% | 6% | 6% |
| Net Income (M) | $52 | -$97 | -$427 | $5 | $128 | $132 |
| Net Interest Expense (M) | $9 | $5 | $1 | $3 | $8 | -$2 |
| Depreciation & Amort. (M) | $41 | $41 | $28 | $23 | $19 | $24 |
| Diluted Shares (M) | 109 | 109 | 109 | 110 | 111 | 108 |
| Earnings Per Share | $0.47 | -$0.89 | -$3.91 | $0.05 | $1.13 | $1.19 |
| EPS Growth | n/a | -289.36% | -339.33% | 101.28% | 2160.0% | 5.31% |
| Avg. Price | $13.5 | $12.91 | $7.26 | $9.22 | $10.14 | $11.765 |
| P/E Ratio | 28.72 | -14.51 | -1.86 | 184.4 | 8.89 | 9.8 |
| Free Cash Flow (M) | $62 | $219 | $181 | $25 | n/a | $72 |
| Current Ratio | 2.76 | 2.69 | 3.17 | 2.39 | 2.32 | 2.44 |
The stock of Company XYZ, currently trading at $11.75 per share, appears to be undervalued due to its strong earnings growth potential and a PEG ratio of 0.9, indicating potential undervaluation relative to its earnings growth. Despite its declining revenues and thinner gross margins compared to industry averages, the company's increasing capital expenditures and improving operating margins suggest a positive growth trajectory.
Furthermore, the company's free cash flows have averaged $93.17 million over the last 5 years, indicating stability and potential for future investment. However, the poor record of retained earnings and negative growth rate in free cash flows are concerning factors for potential investors.
It's important to note that this analysis does not constitute personalized financial advice, and individuals should conduct their own research or consult with a financial advisor before making any investment decisions.
