| Valuation method | Value, £ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 21.60 | 42 |
| Intrinsic value (DCF) | 6.14 | -60 |
| Graham-Dodd Method | 9.30 | -39 |
| Graham Formula | 5.90 | -61 |
NOW Inc. (NYSE: DNOW) is a leading global distributor of downstream energy and industrial products, serving the petroleum refining, chemical processing, LNG terminals, power generation, and industrial manufacturing sectors. Operating under the DistributionNOW and DNOW brands, the company provides a comprehensive range of products, including maintenance, repair, and operating (MRO) supplies, pipes, valves, fittings, and specialized equipment like artificial lift systems and modular process solutions. With a network of approximately 180 locations across the U.S., Canada, and international markets, NOW Inc. serves upstream, midstream, and downstream energy customers, including drilling contractors, oil and gas companies, refineries, and industrial manufacturers. Founded in 1862 and headquartered in Houston, Texas, NOW Inc. combines deep industry expertise with supply chain and materials management solutions, offering procurement, inventory planning, and logistics services. The company’s focus on operational efficiency and customer-centric solutions positions it as a key player in the industrial distribution sector, particularly in energy-related markets.
NOW Inc. presents a compelling investment case with its strong market position in the energy and industrial distribution sector. The company’s diversified product portfolio and extensive geographic reach provide resilience against cyclical industry downturns. With a market cap of ~$1.52B, revenue of $2.37B, and net income of $81M in the latest fiscal year, NOW Inc. demonstrates solid financial performance. Its robust operating cash flow of $298M and manageable total debt of $42M suggest a healthy balance sheet. However, the company’s beta of 1.198 indicates higher volatility relative to the market, reflecting sensitivity to energy sector fluctuations. The lack of dividends may deter income-focused investors, but NOW Inc.’s focus on growth and operational efficiency could appeal to those seeking exposure to industrial distribution with ties to energy markets.
NOW Inc. competes in the highly fragmented industrial distribution sector, where scale, supply chain efficiency, and customer relationships are critical. The company’s competitive advantage lies in its specialized focus on energy and industrial markets, offering tailored solutions like modular process equipment and artificial lift systems. Its extensive distribution network (~180 locations) ensures proximity to key customers, enhancing service reliability. NOW Inc. also differentiates itself through value-added services such as inventory management and logistics support, which help customers optimize operations. However, the company faces intense competition from larger distributors with broader product offerings and greater financial resources. Its reliance on the energy sector exposes it to commodity price volatility, though diversification into industrial markets mitigates some risk. NOW Inc.’s ability to maintain margins in a competitive pricing environment will depend on operational efficiency and its value-added service model.