National-Oilwell Varco, Inc. (NOV), Schlumberger Limited. (SLB): Temporary Issues For This Energy Stock

Halliburton Company (NYSE:HAL) depends more on the North American market, but the company still managed to beat analyst estimates in July. Halliburton expects its operations in the eastern hemisphere to grow in the mid-teens while predicting margins to expand in North America. The weakness in North America did take its toll on the company, with operating income falling by 22% in the quarter and revenue declining by 8% in the region. And with much of Halliburton’s business based in North America, continued weakness could be a problem. Halliburton trades at just 11.3 times expected 2014 earnings, putting it in the same league as National-Oilwell Varco, Inc. (NYSE:NOV). It seems that North American weakness is the main cause of these low multiples.

The bottom line

The problems facing National-Oilwell Varco, Inc. (NYSE:NOV) are temporary, and as the North American market strengthens and the company brings itself back into balance margins should recover to some degree. This year is a transitional year for the company, and long-term National Oilwell Varco is in good position to benefit from its acquisition spree. National Oilwell Varco remains a solid choice for the long-term, and once the company fixes its current problems I expect margins and the stock to rise.

Timothy Green owns shares of National Oilwell Varco. The Motley Fool recommends Halliburton and National Oilwell Varco. The Motley Fool owns shares of National Oilwell Varco.

The article Temporary Issues For This Energy Stock originally appeared on Fool.com.

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