NOV Q3 2026: Weak Bookings and Tariff Noise Obscure Modest Underlying Growth

What happened

NOV reported Q3 2026 revenue of $2.23B, up 4% sequentially and 2% year-over-year, but net income fell $22M sequentially to $90M due to a $35M smaller tariff refund benefit compared to Q2. Adjusted EBITDA of $281M was down $2M sequentially but up $23M year-over-year, yet stripping out tariff refunds ($5M in Q3 vs $40M in Q2) reveals underlying EBITDA actually improved by $33M sequentially and $18M year-over-year. Bookings of $577M with a book-to-bill of 91% indicate orders remain below revenue, consistent with the prior quarter-year's 66% and below the >1.0 threshold that would reinforce the BUY thesis. The DeepValue master report's BUY stance hinges on backlog visibility and offshore/international mix, but these results show backlog is being consumed without equivalent replenishment, adding pressure to future revenue. While one-time tariff refunds flatter reported figures, the underlying operational trajectory is modestly positive, but the weak order intake remains the key risk to the investment case.

Implication

The Q3 2026 results do not fundamentally invalidate the BUY thesis, but they raise the urgency of monitoring order intake, which has now been below 1.0 in two reported quarters. The tariff refund distortions mask sequential improvements in underlying EBITDA, which is a positive sign for margin execution on existing backlog. However, with bookings at only $577M and a 91% book-to-bill, NOV is not replacing its consumed backlog at a sufficient pace, potentially limiting future revenue growth. The offshore/international upcycle remains a tailwind, but if book-to-bill stays below 1.0 for multiple consecutive quarters, the thesis would shift to HOLD. For now, investors can maintain exposure but should demand evidence of stronger order intake or backlog stabilization before adding to positions.

Thesis delta

The thesis remains BUY, but the margin of safety has narrowed. The underlying EBITDA trend is encouraging, but the weak book-to-bill ratio is a clear negative that challenges the backlog-driven visibility. If order intake does not improve to above 1.0 in the next one to two quarters, a downgrade to HOLD would be warranted.