Why DNOW Stock Got Rocked on Friday

Energy products manufacturer DNOW (DNOW 19.13%) had quite the forgettable Friday on the stock exchange. The specialized industrial company’s shares fell by more than 19% in value, due largely to quarterly earnings that missed on both the top and bottom lines.

Integration challenges

That morning, DNOW took the wraps off its fourth quarter and full-year 2025 results. These showed that revenue nearly doubled year-over-year, increasing to $959 million from $571 million, although much of the increase was due to the company’s absorption of pipes, valves, and fittings distributor MRC Global, the acquisition of which closed last November.

Image source: Getty Images.

On the bottom line, DNOW’s net income not in accordance with generally accepted accounting principles (GAAP) landed at $23 million, or $0.15 per share. That compared unfavorably to the year-ago quarter, however, as that period’s profit was $27 million.

Despite the ballooning top line, DNOW missed the analyst consensus estimates for both figures. Those pundits were collectively modeling almost $988 million for revenue, and a per-share, non-GAAP (adjusted) net income of $0.16.

Addressing investor concerns about difficulties with a legacy enterprise resource planning (ERP) system burdening MRC Global, DNOW quoted CEO David Cerechinsky as saying that “While these complexities have created near-term obstacles, we are actively addressing them and remain focused on positioning the business for long-term growth.”

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NYSE: DNOW

NOW

Today’s Change

(-19.13%) $-3.13

Current Price

$13.23

Key Data Points

Market Cap

$3.0B

Day’s Range

$12.79 - $15.25

52wk Range

$12.01 - $17.83

Volume

11M

Avg Vol

2.1M

Gross Margin

23.07%

Wait and see?

While it’s understandable that investors are concerned about whether and how those “complexities” will be ironed out, I don’t think they ruin the prospects of the recently enlarged DNOW (besides, the market has known about MRC’s software issues for some time).

That being said, all indications are that it’s a thorny issue, and the smooth integration of MRC likely depends – at least to a degree – on resolving it. I’d hold off on investing in DNOW stock until we see some tangible progress on the situation.