HOUSTON - DNOW Inc. (NYSE: DNOW), a global supplier of energy and industrial products, announced Monday it has agreed to acquire Whitco Supply, LLC, a provider of energy products and solutions. The acquisition is structured as an all-cash transaction, with completion subject to regulatory approvals and customary closing conditions.
David Cherechinsky, President and CEO of DNOW, stated that the acquisition is in line with the company's strategic goals to diversify its end-markets and follows a "patient, disciplined approach to capital allocation." Cherechinsky expressed confidence that the deal would enhance DNOW's earnings and free cash flow, thereby increasing shareholder value.
He also emphasized the value Whitco Supply's team and their product expertise will bring to DNOW, expanding support for customers in the midstream and other markets. The integration of the two businesses is expected to create broader opportunities for customers, employees, and suppliers.
Until the transaction is finalized, DNOW and Whitco Supply will continue to operate independently. Further details will be disclosed following the conclusion of the regulatory review process and other closing conditions.
Whitco Supply, established in 2003 and headquartered in Broussard, LA, has about 230 employees and operates across eight locations in the United States, serving the midstream market and the wider energy sectors.
DNOW boasts a legacy of 160 years and is headquartered in Houston, Texas. The company employs approximately 2,475 people and operates a network of locations worldwide. DNOW provides supply chain solutions and a suite of digital solutions known as DigitalNOW®, which offers technology for digital commerce and data management. The company serves various sectors, including exploration and production, midstream transmission and storage, refineries, and companies in the decarbonization and renewables markets.
This press release contains forward-looking statements as defined under Section 21E of the Securities Exchange Act of 1934, which are subject to risks and uncertainties that could cause actual results to differ materially. DNOW advises reading documents filed with the U.S. Securities and Exchange Commission that detail significant risk factors.
The information in this article is based on a press release statement from DNOW.
InvestingPro Insights
As DNOW Inc. (NYSE: DNOW) moves forward with its strategic acquisition of Whitco Supply, LLC, it's valuable for investors to consider key financial metrics and insights that may impact the company's performance and their investment decisions. DNOW's management has demonstrated confidence in the company's trajectory through aggressive share buybacks, and the company's financial health is underscored by its strong cash position, holding more cash than debt on its balance sheet. These factors are positive indicators for investors looking at the company's capital allocation strategy and financial stability.
In terms of valuation, DNOW is currently trading at a low P/E ratio of 8.12, suggesting that the stock may be undervalued relative to near-term earnings growth. Moreover, the company's PEG ratio stands at 0.36, which could indicate potential for future earnings growth that is not yet reflected in the stock's price. With a price to book ratio of 1.14, the company's market valuation is in line with its book value, which could appeal to value-oriented investors.
Analysts predict that DNOW will be profitable this year, as evidenced by the company's profitability over the last twelve months. However, it's important to note that three analysts have revised their earnings estimates downwards for the upcoming period, which may warrant closer scrutiny. For investors seeking additional insights, there are more InvestingPro Tips available, including details on how liquid assets exceed short-term obligations and the company's lack of dividend payments, which could influence reinvestment strategies.
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