📊 DNOW Key Takeaways
Is DNOW Inc. (DNOW) a Good Investment?
DNOW exhibits fundamental deterioration despite 18.8% revenue growth: negative operating cash flow (-$95M), unprofitable operations (-$50M operating loss), and sharply declining earnings (-207% EPS YoY) indicate the company cannot convert growth into cash generation. The negative free cash flow (-$103M) with modest cash reserves ($116M) creates unsustainable burn dynamics absent operational improvement.
DNOW shows solid top-line momentum and healthy free cash flow generation, supported by a strong liquidity position and modest leverage. However, the latest period's negative operating and net margins, along with negative ROE and ROA, indicate that growth is not yet translating into durable profitability. Fundamentally, the company looks financially stable but operationally mixed, which supports a neutral stance until margins recover.
DNOW Inc. Key Strengths (DNOW)
- Revenue growth of 18.8% YoY demonstrates continued market demand
- Manageable leverage with Debt/Equity ratio of 0.27x
- Adequate near-term liquidity with current ratio of 2.42x
- Revenue growth of 18.8% YoY indicates strong demand and commercial traction
- Strong balance sheet with 2.34x current ratio, 1.11x quick ratio, and low 0.18x debt-to-equity
- Positive operating cash flow of $155M and free cash flow of $134M provide financial flexibility
DNOW Stock Risks: DNOW Inc. Investment Risks
- Negative operating cash flow of -$95M indicates core business is not generating cash and is operationally unsustainable
- Deteriorating profitability with operating margin of -4.2% and EPS declining 207% YoY despite revenue growth
- Negative free cash flow of -$103M with low cash position ($116M) creates severe liquidity risk if burn rate continues unabated
- Operating loss and net loss show the business is currently not converting sales into earnings
- Thin 17.0% gross margin leaves limited buffer against cost pressure and execution missteps
- Negative ROE and ROA suggest weak capital efficiency and poor returns on the asset base
Key Metrics to Watch
- Operating Cash Flow - must turn positive to validate business sustainability
- Operating Margin - must reach positive territory to demonstrate pricing power and cost control
- Cash Position and Burn Rate - critical to assess runway and potential financing needs
- Operating margin and net margin improvement
- Free cash flow consistency relative to revenue growth
DNOW Inc. (DNOW) Financial Metrics & Key Ratios
💡 AI Analyst Insight
Strong liquidity with a 2.42x current ratio provides a solid financial cushion.
DNOW Profit Margin, ROE & Profitability Analysis
DNOW vs Industrial Sector: How DNOW Inc. Compares
How DNOW Inc. compares to Industrial sector averages
Sector benchmarks are approximate industry averages. Actual sector performance may vary.
Is DNOW Inc. Stock Overvalued? DNOW Valuation Analysis 2026
Based on fundamental analysis, DNOW Inc. has mixed fundamental signals relative to the Industrial sector in 2026.
Note: This is a fundamental analysis based on SEC filings. For P/E ratio, price targets, and market-based valuation, consult financial data providers. This is not investment advice.
DNOW Inc. Balance Sheet: DNOW Debt, Cash & Liquidity
DNOW Revenue & Earnings Growth: 5-Year Financial Trend
5-Year Trend Summary: DNOW Inc.'s revenue has remained relatively flat over the 5-year period, with a 4% decline. The most recent EPS of $2.27 reflects profitable operations.
DNOW Revenue Growth, EPS Growth & YoY Performance
DNOW Quarterly Earnings & Performance
| Quarter | Revenue | Net Income | EPS |
|---|---|---|---|
| Q1 2026 | $599.0M | $21.0M | $0.19 |
| Q3 2025 | $606.0M | $13.0M | $0.12 |
| Q2 2025 | $628.0M | $24.0M | $0.21 |
| Q1 2025 | $563.0M | $21.0M | $0.19 |
| Q3 2024 | $588.0M | $13.0M | $0.12 |
| Q2 2024 | $594.0M | $24.0M | $0.21 |
| Q1 2024 | $563.0M | $21.0M | $0.19 |
| Q3 2023 | $577.0M | $35.0M | $0.32 |
Data sourced from SEC EDGAR 10-Q quarterly filings. Figures may represent quarterly or cumulative values.
DNOW Inc. Dividends, Buybacks & Capital Allocation
DNOW SEC Filings: Latest 10-K & 10-Q Analysis
Access official SEC EDGAR filings for DNOW Inc. (CIK: 0001599617)
📋 Recent SEC Filings
❓ Frequently Asked Questions about DNOW
What is the AI rating for DNOW?
DNOW Inc. (DNOW) has a Combined AI Grade of C from Claude (D) and ChatGPT (B) with 80% combined confidence, based on fundamental analysis of SEC EDGAR filings.
What are DNOW's key strengths?
Claude: Revenue growth of 18.8% YoY demonstrates continued market demand. Manageable leverage with Debt/Equity ratio of 0.27x. ChatGPT: Revenue growth of 18.8% YoY indicates strong demand and commercial traction. Strong balance sheet with 2.34x current ratio, 1.11x quick ratio, and low 0.18x debt-to-equity.
What are the risks of investing in DNOW?
Claude: Negative operating cash flow of -$95M indicates core business is not generating cash and is operationally unsustainable. Deteriorating profitability with operating margin of -4.2% and EPS declining 207% YoY despite revenue growth. ChatGPT: Operating loss and net loss show the business is currently not converting sales into earnings. Thin 17.0% gross margin leaves limited buffer against cost pressure and execution missteps.
What is DNOW's revenue and growth?
DNOW Inc. reported revenue of $1.2B.
Does DNOW pay dividends?
DNOW Inc. does not currently pay dividends.
Where can I find DNOW SEC filings?
Official SEC filings for DNOW Inc. (CIK: 0001599617) including 10-K, 10-Q, and 8-K reports are available on SEC EDGAR.
What is DNOW's EPS?
DNOW Inc. has a diluted EPS of $-0.24.
How is the AI analysis conducted?
Two independent AI systems — Claude (Anthropic) and ChatGPT (OpenAI) — analyze SEC EDGAR filings including 10-K annual reports and 10-Q quarterly reports. Each AI evaluates financial health, profitability ratios, balance sheet strength, and growth metrics. The combined grade reflects both perspectives for balanced insights.
What is DNOW's fundamental grade?
Based on our AI fundamental analysis in June 2026, DNOW Inc. has a C grade with 80% confidence. Review the strengths and risks sections above for full context. This is not investment advice.
Is DNOW stock overvalued or undervalued?
Valuation metrics for DNOW: ROE of -2.1% (sector avg: 15%), net margin of -3.7% (sector avg: 10%). Compare these metrics with sector averages to assess valuation.
What is DNOW's AI grade for 2026?
Our dual AI analysis gives DNOW Inc. a combined C grade for 2026. Revenue is data pending, with profitability at or below sector average. Always conduct your own research.
What is DNOW's free cash flow?
DNOW Inc.'s operating cash flow is $-95.0M, with capital expenditures of $8.0M. FCF margin is -8.7%.
How does DNOW compare to other Industrial stocks?
Vs Industrial sector averages: Net margin -3.7% (avg: 10%), ROE -2.1% (avg: 15%), current ratio 2.42 (avg: 1.8).