Todd, are you still following NOV? On 8/5/98 you wrote:
>>Overall, the outlook for NOV's businesses is very good, and the stock is a giveaway at current prices. Actually, the outpatient/O&P/occupational health businesses are near-giveaways, as the current price reflects only the contract and PEO interest.<<
Now, with the stock trading at 1 3/4, NOV's market cap ($110MM) is less than the market value of its NCES holding (PEO interest). Those 19.4MM NCES shares held by NOV are currently valued at $130MM. There has to be substantial value left in NOV's other businesses, but this is being totally discounted in the current market price.
My rough estimate of NOV's private market value is at least $7/share, which is less than the book value of $9/share. The $7 number is simply based on 1x revenue for the profitable and growing O/P Services segment, 0.5x revenue for the clouded L/T Care segment, plus the current market valuation for their NCES holdings, less outstanding debt.
I spoke with Investor Relations this morning and got very positive feedback: The next few quarters could be challenging but the long term outlook is good. Taking aggressive steps to reduce costs, particularly in the L/T Care segment. No concern about not being able to restructure debt, etc...not on the brink of bankruptcy as has been rumored in certain internet discussion groups. NOV plans to announce no later than 7/1/99 a refinancing/restructuring plan that could include sale of assets or businesses.
As a long term investor, I'm buying more at these levels. Looking for at least a 4-bagger in the next 1 to 2 years. Your views would be appreciated.
Barry |
