# Now (DNOW.US)

Canonical: https://gigainvestors.com/s/DNOW

Analysis as of: 2026-10-16T07:28:03.947Z. Financial observations: FY2012–FY2025.

Listing currency: USD. Reporting currency: USD.

## Verdict

Not a wonderful business

Quality tests for Buy: not passed (profit record: fail; earnings resilience is evidence only). Published buy qualification: no.

Share price: $15.02 per share; close as of 2026-10-15.

Estimated value: low $11.21 per share, central $12.73 per share, high $14.75 per share. Buy at or below the central value $12.73 per share. Valuation as of 2026-10-16T07:28:03.947Z; scenarios are not confidence intervals.

Expected annual return: 8.9% at the stated quote. About 8.9% a year at today's price (required return 10.0%). required return 10.0% a year (10% floor; US 10-year bond 5.1% + 4 points).

## Checklist

### understandable: fail

- 3 revenue declines in the last 10 years (informational)

- more than 2 net loss years

- negative average operating margin

- operating margin variation exceeds 0.35

- Financial history: 10 years

- Years with declining revenue: 3

- Years with a net loss: 5

- Operating margin variation: 4.26×

Chart: Operating margin; fiscal year observations.

- FY2016: -0.11×

- FY2017: -0.02×

- FY2018: 0.02×

- FY2019: -0.03×

- FY2020: -0.26×

- FY2021: 0.01×

- FY2022: 0.06×

- FY2023: 0.06×

- FY2024: 0.05×

- FY2025: -0.01×

### moat: fail

- ROIC median below threshold

- ROIC worst years below threshold (more than 1 bad year allowed)

- ROIC, median of available years: 0.5%

- ROIC, second-lowest year: -19.4%

- Typical minus recent gross margin: 3.1 pp

- Typical gross margin (annual median): 20.0%

- Recent gross margin (lower of latest and 3-year median): 17.0%

- Years with nonpositive capital: 0

- Capital spending / revenue: 0.4%

- ROIC including acquisitions, ten-year median: 2.3%

Chart: ROIC excluding acquisitions; fiscal year observations.

- FY2016: -19.4%

- FY2017: -3.2%

- FY2018: 7.0%

- FY2019: -8.3%

- FY2020: -92.4%

- FY2021: 1.6%

- FY2022: 22.0%

- FY2023: 21.1%

- FY2024: 12.0%

- FY2025: -0.7%

### economics: pass

- Owner earnings / net income, 5-yr: 1.25×

- Cash conversion uses consolidated totals: No

- Owner earnings, five-year total: $465M

- Net income, five-year total: $372M

- Return on incremental invested capital: 209.4%

- Working capital / revenue, annual change: 0.8 pp

- Working capital / revenue, change between three-year averages: 3.0 pp

- Working capital / revenue, final three-year average: 29.5%

Chart: Annual owner cash / profit; fiscal year observations.

- FY2021: 4.60×

- FY2022: 1.08×

- FY2023: 1.04×

- FY2024: 1.31×

- FY2025: 0.65×

### management: pass

- Historical market-dollar context (not the management verdict): 2016 to 2025 (9 years)

- potential debt-funded buybacks (informational)

- buybacks leaned toward cheaper years (informational)

- ROIC first 3 years vs last 3 years: -3.2% vs 12.0%

- Per-share earnings: -2.18 to 0.76 (three-year endpoint medians)

- Management verdict uses per-share economic progress: Yes

- Ordinary dilution, 10-year annual growth: 1.0%

- Ordinary dilution, 5-year annual growth: 1.5%

- Market cap gain: $266M

- Cumulative retained earnings: -$158M

- Diluted shares, 10-year annual growth: 1.0%

- Diluted shares, 5-year annual growth: 1.5%

- $1 test, starting fiscal year: FY2016

- $1 test, ending fiscal year: FY2025

- Per-share value change: $2.93

- Per-share value, starting three-year median: -$2.18

- Per-share value, ending three-year median: $0.76

- Buybacks concentrated in cheaper years (correlation): 0.40

- Average buyback yield: 2.0%

- Buyback history: 4 years

- Debt-funded buybacks: Yes

- Acquisition spending: $1.3B

- Cumulative net income, 10 years: -$386M

- ROIC, first three-year median: -3.2%

- ROIC, last three-year median: 12.0%

Chart: Earnings per share; fiscal year observations.

- FY2016: -$2.18

- FY2017: -$0.48

- FY2018: $0.48

- FY2019: -$0.89

- FY2020: -$3.90

- FY2021: $0.05

- FY2022: $1.15

- FY2023: $2.28

- FY2024: $0.76

- FY2025: -$0.76

### accounting: fail

- latest-year receivables to sales index (DSRI) exceeds 1.465

- stock compensation exceeds 15% of operating cash flow

- Sloan accruals: -6.2%

- Receivables to sales index (DSRI): 1.90×

- Restructuring years, last five: 2

- Stock compensation / operating cash flow: 18.7%

- Earnings backed by cash: Yes

- Accounting red flags: 2

- Goodwill and intangibles / equity: 0.53×

Chart: Sloan accruals; fiscal year observations.

- FY2016: -29.3%

- FY2017: 3.6%

- FY2018: -1.2%

- FY2019: -20.2%

- FY2020: -61.1%

- FY2021: -2.3%

- FY2022: 10.2%

- FY2023: 3.9%

- FY2024: -13.4%

- FY2025: -6.2%

## Holders

- [Seth Klarman](https://gigainvestors.com/BAUPOST): tracked 13F investor; follow the investor page for holding quarter and amounts.

- [Matthew McLennan](https://gigainvestors.com/FE): tracked 13F investor; follow the investor page for holding quarter and amounts.

- [Edgar Wachenheim](https://gigainvestors.com/GA): tracked 13F investor; follow the investor page for holding quarter and amounts.

- [Richard Pzena](https://gigainvestors.com/PIM): tracked 13F investor; follow the investor page for holding quarter and amounts.

## Price story

Price needs cash profits to grow 3% a year for ten years · "DNOW Targets $70M in MRC Synergies as Data Centers Fuel Growth" (finance.yahoo.com, Aug 2026) · sales +18.8%

Story as of 2026-10-16T09:58:38.851Z; price observation 2026-10-15.

Price needs cash profits to grow 3% a year for ten years

- 2025-08-06: NOW beats top-line and bottom-line estimates; reaffirms FY25 outlook ([seekingalpha.com](https://seekingalpha.com/news/4479612-now-beats-top-line-and-bottom-line-estimates-reaffirms-fy25-outlook?utm_source=feed_news_all&utm_medium=referral&feed_item_type=news))

- 2026-02-20: DNOW outlines $23M year-one synergy target and delays guidance amid ERP integration challenges ([seekingalpha.com](https://seekingalpha.com/news/4554851-dnow-outlines-23m-year-one-synergy-target-and-delays-guidance-amid-erp-integration-challenges?utm_source=feed_news_all&utm_medium=referral&feed_item_type=news))

- 2026-08-07: DNOW Q2 Earnings Beat Estimates on Revenue Growth, Outlook Raised ([finance.yahoo.com](https://finance.yahoo.com/markets/stocks/articles/dnow-q2-earnings-beat-estimates-153400469.html))

### Sales · FY2024–2025

sales +18.8%; source https://www.sec.gov/Archives/edgar/data/1599617/000119312526072828/dnow-20251231.htm; observed 2026-02-26.

- FY2016: $2.1B 

- FY2017: $2.6B 

- FY2018: $3.1B 

- FY2019: $3.0B 

- FY2020: $1.6B 

- FY2021: $1.6B 

- FY2022: $2.1B 

- FY2023: $2.3B 

- FY2024: $2.4B 

- FY2025: $2.8B 

### Gross margin · FY2025

gross margin 17%; source https://www.sec.gov/Archives/edgar/data/1599617/000119312526072828/dnow-20251231.htm; observed 2026-02-26.

- FY2016: 16.4% 

- FY2017: 18.9% 

- FY2018: 20.1% 

- FY2019: 19.9% 

- FY2020: 18.0% 

- FY2021: 21.9% 

- FY2022: 23.7% 

- FY2023: 23.1% 

- FY2024: 22.5% 

- FY2025: 17.0% 

## Owner memo

Memo as of 2026-10-16T08:06:05.509Z.

### How it makes money

Operates in industrial distribution; annual sales are USD 2.8 billion.

- Source: https://www.sec.gov/Archives/edgar/data/1599617/000119312526072828/dnow-20251231.htm (filed 2026-02-26); FY2025: revenue 2820000000; grossProfit 478000000; margin = grossProfit / revenue.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16); DNOW.US: DNOW Inc. distributes pipe, valves, fittings, and pumps in the United States, Canada, and internationally. The company offers flanges, gaskets, fasteners, electrical, instrumentation, artificial lift, and pumping systems, process and production equipment, production measurement technology, maintenance, repair and operating consumables (MRO), and general and specialty products; personal protective equipment; and mill, tools, safety supplies, as well as vapor recovery systems under EcoVapo brand. It also offers original equipment manufacturer equipment, including pumps, generator sets, air compressors, dryers, blowers, mixers, and valves; modular oil and gas wellsite facility solutions; and application systems, work processes, parts integration, optimization solutions, and after-sales support services. In addition, the company provides supply chain and materials management; inventory planning; integrated supply; integrated supply; product quality programs; manufacturer assessments; multiple daily deliveries; volume purchasing; truck stocking; technical support; training; just-in-time delivery; and on-site commissioning; after-market field repair and rental mobile pumping units; inventory and zone store management; order consolidation; product tagging and system interfaces tailored; supplier specifications; engineering of control packages; valve inspection and repair; product expediting, tracking and tracing; documentation services; and pressure testing services. It serves customers in the upstream, midstream, and Gas Utilities sectors, as well as downstream and industrial including crude oil refining, petrochemical and chemical processing, general industrials, pharmaceutical, mining, water/wastewater treatment, data centers, liquefied natural gas, and terminals and renewable natural gas facilities. The company was formerly known as NOW Inc. and changed its name to DNOW Inc. in January 2024. DNOW Inc. was founded in 1862 and is headquartered in Houston, Texas.

### Why customers stay

Margins ranged from 17% to 23.1% during 2023–25; it earns 0.5% on its capital.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-26); FY2023: grossProfit / revenue = 23.1%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-26); FY2024: grossProfit / revenue = 22.5%.

- Source: https://www.sec.gov/Archives/edgar/data/1599617/000119312526072828/dnow-20251231.htm (filed 2026-02-26); FY2025: grossProfit / revenue = 17%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-26); 10-year return on capital observations [[2016,-0.19400442477876106],[2017,-0.032228855721393036],[2018,0.07037449017426771],[2019,-0.08321065989847716],[2020,-0.9242339832869081],[2021,0.016115702479338842],[2022,0.22024554269627775],[2023,0.21116138763197587],[2024,0.11953044375644994],[2025,-0.006593028964162985]]; median 0.004761336757587929. ROIC follows the displayed moat series; financial companies use return on tangible equity.

### Can it raise prices

Kept about a 24% gross margin through 2022 cost inflation.

- Source: https://www.sec.gov/Archives/edgar/data/1599617/000119312526072828/dnow-20251231.htm (filed 2026-02-26); Gross margin observations: [[2021,0.21875],[2022,0.23689138576779026],[2023,0.23050409306333478]]; range within 2 percentage points.

### Where the cash goes

Paid no dividends in 10 years; bought back USD 37 million of shares.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-26); FY2018: growth capex 0; upkeep 11000000; owner earnings 82000000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-26); FY2021: growth capex 0; upkeep 5000000; owner earnings 23000000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-26); FY2022: growth capex 0; upkeep 9000000; owner earnings 138000000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-26); FY2023: growth capex 0; upkeep 17000000; owner earnings 256000000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-26); FY2024: growth capex 0; upkeep 9000000; owner earnings 106000000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-26); Dividend observations: [[2016,0],[2017,0],[2018,0],[2019,0],[2020,0],[2021,0],[2022,0],[2023,0],[2024,0],[2025,0]]. Zero only counted when supported by a complete cash-flow statement.

- Source: https://www.sec.gov/Archives/edgar/data/1599617/000119312526072828/dnow-20251231.htm (filed 2026-02-26); FY2025: cash repurchases 37000000 USD.

### Are managers owners

Insiders own 1.7% of the company.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16); DNOW.US SharesStats.PercentInsiders = 1.698 percentage points; cache date 2026-10-16.

### What the price says

The price assumes cash profits grow 3% yearly over ten years.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-26); Ten-year compound average after fade. Initial solved rate 0.02996057548341924. Price 15.02; FX 1; discount 0.1; same standard ten-year fade to terminal 0.03. FY2015 owner earnings/share -4.432046243466651 → FY2025 -0.49202496249624555. Closing-price date 2026-10-15.

## Monthly share-price history (USD per share)

- 2016-10: $21.56 per share

- 2016-11: $21.54 per share

- 2016-12: $20.47 per share

- 2017-01: $21.26 per share

- 2017-02: $19.14 per share

- 2017-03: $16.96 per share

- 2017-04: $17.01 per share

- 2017-05: $16.51 per share

- 2017-06: $16.08 per share

- 2017-07: $15.93 per share

- 2017-08: $11.66 per share

- 2017-09: $13.81 per share

- 2017-10: $12.52 per share

- 2017-11: $10.32 per share

- 2017-12: $11.03 per share

- 2018-01: $11.79 per share

- 2018-02: $9.49 per share

- 2018-03: $10.22 per share

- 2018-04: $12.13 per share

- 2018-05: $14.06 per share

- 2018-06: $13.33 per share

- 2018-07: $14.95 per share

- 2018-08: $17.19 per share

- 2018-09: $16.55 per share

- 2018-10: $12.84 per share

- 2018-11: $13.49 per share

- 2018-12: $11.64 per share

- 2019-01: $13.53 per share

- 2019-02: $14.43 per share

- 2019-03: $13.96 per share

- 2019-04: $14.62 per share

- 2019-05: $13.03 per share

- 2019-06: $14.76 per share

- 2019-07: $12.25 per share

- 2019-08: $11.89 per share

- 2019-09: $11.47 per share

- 2019-10: $10.54 per share

- 2019-11: $11.21 per share

- 2019-12: $11.24 per share

- 2020-01: $10.01 per share

- 2020-02: $8.83 per share

- 2020-03: $5.16 per share

- 2020-04: $6.17 per share

- 2020-05: $7.45 per share

- 2020-06: $8.63 per share

- 2020-07: $7.88 per share

- 2020-08: $7.27 per share

- 2020-09: $4.54 per share

- 2020-10: $4.07 per share

- 2020-11: $5.58 per share

- 2020-12: $7.18 per share

- 2021-01: $8.29 per share

- 2021-02: $10.63 per share

- 2021-03: $10.09 per share

- 2021-04: $9.82 per share

- 2021-05: $10.47 per share

- 2021-06: $9.49 per share

- 2021-07: $9.87 per share

- 2021-08: $7.68 per share

- 2021-09: $7.65 per share

- 2021-10: $7.22 per share

- 2021-11: $8.36 per share

- 2021-12: $8.54 per share

- 2022-01: $8.89 per share

- 2022-02: $9.34 per share

- 2022-03: $11.03 per share

- 2022-04: $10.90 per share

- 2022-05: $11.04 per share

- 2022-06: $9.78 per share

- 2022-07: $11.06 per share

- 2022-08: $12.12 per share

- 2022-09: $10.05 per share

- 2022-10: $12.73 per share

- 2022-11: $12.48 per share

- 2022-12: $12.70 per share

- 2023-01: $14.04 per share

- 2023-02: $12.85 per share

- 2023-03: $11.15 per share

- 2023-04: $10.67 per share

- 2023-05: $8.89 per share

- 2023-06: $10.36 per share

- 2023-07: $11.39 per share

- 2023-08: $11.17 per share

- 2023-09: $11.87 per share

- 2023-10: $11.02 per share

- 2023-11: $9.97 per share

- 2023-12: $11.32 per share

- 2024-01: $10.09 per share

- 2024-02: $14.15 per share

- 2024-03: $15.20 per share

- 2024-04: $14.11 per share

- 2024-05: $14.59 per share

- 2024-06: $13.73 per share

- 2024-07: $15.36 per share

- 2024-08: $13.02 per share

- 2024-09: $12.93 per share

- 2024-10: $11.83 per share

- 2024-11: $15.05 per share

- 2024-12: $13.01 per share

- 2025-01: $14.88 per share

- 2025-02: $15.98 per share

- 2025-03: $17.08 per share

- 2025-04: $15.87 per share

- 2025-05: $14.42 per share

- 2025-06: $14.83 per share

- 2025-07: $15.56 per share

- 2025-08: $16.00 per share

- 2025-09: $15.25 per share

- 2025-10: $14.70 per share

- 2025-11: $13.96 per share

- 2025-12: $13.25 per share

- 2026-01: $15.19 per share

- 2026-02: $11.78 per share

- 2026-03: $11.91 per share

- 2026-04: $13.49 per share

- 2026-05: $12.79 per share

- 2026-06: $12.97 per share

- 2026-07: $14.12 per share

- 2026-08: $16.03 per share

- 2026-09: $15.50 per share

- 2026-10: $15.02 per share

## Annual estimated value (USD per share)

- FY2016: low $5.71 per share, central $6.42 per share, high $7.36 per share

- FY2022: low $4.48 per share, central $4.89 per share, high $5.43 per share

- FY2023: low $5.63 per share, central $6.08 per share, high $6.69 per share

- FY2024: low $12.76 per share, central $14.25 per share, high $16.23 per share

- FY2025: low $12.59 per share, central $14.20 per share, high $16.35 per share

Historical values use today's bond yield for every fiscal year

Historical values use today's FX rate into trading currency for every fiscal year

Historical values use current restated fundamentals and current commodity classification; they are not point-in-time estimates

## Sources

[Original 10-K filing](https://www.sec.gov/Archives/edgar/data/1599617/000119312526072828/dnow-20251231.htm); period 2025-12-31, filed 2026-02-26.

Estimates depend on assumptions and are not guarantees or investment advice. Underlying data remains subject to its source licenses; public reading does not grant bulk redistribution rights.