Nothing raises more fear or hopes in a business than change in management. The questions are always the same, will the new CEO shift the company's direction? Does the change mean the business was not doing well before? Can overall performance improve? How will the market and shareholders react to the news? What about prospect investors? The truth is that there is no certain answer to the many inquiries a change in management raises. However, an assessment can be made based on the firm's previous performance and new management's discourse. That is exactly what it will be looked upon throughout this analysis that concerns National Oilwell Varco (NOV). So far, gurus have shown great confidence on the company and completed important purchases throughout the last quarter of 2013.
Announced and Smooth Transition
Last March 25, National Oilwell Varco announced that Clay C. Williams has been appointed President and CEO of the company effective immediately. Mr. Williams will be taking over Merrill A. Miller Jr.'s post, who previously announced would step down as part of the planned spin-off of the distribution business.
Mr. Miller said: "I elected to step down early as Chief Executive Officer in order to smooth the transition." While Mr. Williams highlighted the exiting CEO stating that "I look forward to building upon the traditions of diligence and excellence that have been created here." Hence, no significant changes should be expected in the company's business model for the short term. Moreover, the market reacted positively to the news as stock price rose almost $3.
Previously, National Oilwell Varco received the Samsung-Q Gold Mark Certificate, the highest quality award that Samsung gives to its suppliers. Furthermore, the firm has inaugurated a state-of-the-art drilling simulator at the University of Texas at Austin. The award and simulator are a confirmation of the smooth transition planned by management, one in which the business model stood firmly on its rails.
Steady Performance
Zacks has confirmed a "Neutral" recommendation for National Oilwell Varco, on the grounds that sees no obvious catalyst to significantly push the stock price higher. This is not to be taken as if the firm is not expected to growth. On the contrary, growth is expected at moderate levels due to a healthy backlog, strength in international operations, and recent Robbins & Myers acquisition. Most importantly, the spin-off of the distribution business will have a positive impact on overall performance.