Missed NOV’s 40% Run? The Case Holders Had To Stomach

If you only glanced at NOV’s mixed headlines about Middle East disruptions, cost cuts, and analyst downgrades, a solid payoff might be the last thing you would expect. Holding NOV over the past year would have returned 40.3%, including dividends. If you had been weighing those clashing April and September 2025 research views at the starting line, what exactly in the public record could have justified taking that ride?

On Simply Wall St, a Narrative is an investor's thesis written down: the reasoning, plus the numbers it rests on. Run those numbers and you get an estimated Fair Value.

NOV has already moved. See which of 31 high quality undervalued stocks still trade below our estimates.

The Argument NOV Investors Were Really Weighing

The shares cost US$13.23 at the start of the period, and anyone buying NOV then had to choose between two very different stories that both sounded plausible.

The bullish narrative put fair value at US$15.38, which was 16% above the start price. It relied on offshore and international activity, with an assumption that profit margins could reach 6.1% within three years on a future P/E of 11.6x.

The bearish view anchored fair value at US$11, which was 17% below the start price. It focused on decarbonization risk, with an assumption that revenue could decline 1.1% a year and margins compress to 4.3% by 2028.

What The Results Changed In The NOV Debate

NOV’s Q2 2026 figures gave the bullish story something concrete. Revenue slipped from US$2,188m in Q2 2025 to US$2,134m, yet net income edged up from US$108m to US$112m and net margin moved from 4.9% to 5.2%. That pattern, together with offshore contract wins and Brazil capacity expansion, cut both ways for the original arguments.

The hinge assumption here was future profitability, not just sales. For a different stock, you would stress test any margin forecast against later reported net margin, then decide how much you are willing to pay for that level of efficiency.

What NOV’s 40% Run Already Prices In

NOV now trades at US$18.8 after a 40.3% total return over the past year, while the selected Narrative’s Fair Value sits below the current price. That view leans on the idea that cash generation and profitability matter more than headline offshore demand.

A buyer today is effectively assuming NOV converts a large offshore and digital backlog into stronger, consistent free cash flow. The selected Narrative asks how margin pressure, tariffs and higher capital spending interact with that assumption.

"The main factor that has to go right is that NOV converts its offshore and international unconventional backlog, digital and robotics offerings, and cost reduction program into sustainably higher margins and cash generation, despite tariffs, softer shorter-cycle activity, and higher capital expenditure."

One Narrative has put a figure on that disagreement. → See the Narrative with its lower Fair Value, assumptions and all

Looking Beyond NOV’s Offshore Story

NOV’s rigs, tools and digital kit rely on a basic requirement. Heavy equipment needs dependable access to critical materials.

Zoom out one step and that need widens quickly. Energy, defense and data infrastructure all compete for the same specialized metals.

One business is trying to answer that bottleneck with an integrated mine to magnet chain. It wants to turn ore, processing and magnet production into a single workflow.

The aim is simple. Give manufacturers a domestic source of rare earth magnets and related alloys, then watch how that might reshape who captures more value.

The case is written up, with the assumptions it depends on. → Discover the critical minerals company one Narrative values 162% above its price

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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