Despite a 97.5% revenue increase in 2026Q1, the company reported a negative 4.2% operating margin, suggesting an inability to scale profitability effectively.
| Metric | TTM | Dec'25 | Dec'24 | Dec'23 | Dec'22 | Dec'21 | Dec'20 | Dec'19 | Dec'18 | Dec'17 | Dec'16 | Dec'15 | Dec'14 | Dec'13 | Dec'12 |
|---|
| Sales/Revenue | 3.4B | 2.82B | 2.37B | 2.32B | 2.14B | 1.63B | 1.62B | 2.95B | 3.13B | 2.65B | 2.11B | 3.01B | 4.11B | 4.3B | 3.41B |
| Revenue Growth % | 41.3% | 18.84% | 2.24% | 8.66% | 30.88% | 0.8% | -45.14% | -5.63% | 18.09% | 25.68% | -30% | -26.67% | -4.45% | 25.83% | - |
| Cost of Goods Sold | 2.87B | 2.34B | 1.84B | 1.79B | 1.63B | 1.27B | 1.33B | 2.37B | 2.5B | 2.15B | 1.76B | 2.51B | 3.29B | 3.5B | 2.8B |
| COGS % of Revenue | - | 83.05% | 77.45% | 76.95% | 76.31% | 78.13% | 81.96% | 80.14% | 79.85% | 81.08% | 83.63% | 83.32% | 80.05% | 81.45% | 82.1% |
| Gross Profit | 532M | 478M | 535M | 535M | 506M | 357M | 292M | 586M | 630M | 501M | 345M | 502M | 819M | 797M | 611M |
| Gross Margin % | 15.63% | 16.95% | 22.55% | 23.05% | 23.69% | 21.88% | 18.04% | 19.86% | 20.15% | 18.92% | 16.37% | 16.68% | 19.95% | 18.55% | 17.9% |
| Gross Profit Growth % | - | -10.65% | 0% | 5.73% | 41.74% | 22.26% | -50.17% | -6.98% | 25.75% | 45.22% | -31.27% | -38.71% | 2.76% | 30.44% | - |
| Operating Expenses | 693M | 559M | 422M | 395M | 375M | 348M | 712M | 669M | 557M | 542M | 567M | 619M | 638M | 573M | 443M |
| OpEx % of Revenue | - | 19.82% | 17.78% | 17.02% | 17.56% | 21.32% | 43.98% | 22.67% | 17.81% | 20.47% | 26.91% | 20.56% | 15.54% | 13.34% | 12.98% |
| Selling, General & Admin | 693M | 559M | 416M | 395M | 365M | 341M | 391M | 541M | 557M | 542M | 567M | 619M | 638M | 573M | 443M |
| SG&A % of Revenue | - | 19.82% | 17.53% | 17.02% | 17.09% | 20.89% | 24.15% | 18.33% | 17.81% | 20.47% | 26.91% | 20.56% | 15.54% | 13.34% | 12.98% |
| Research & Development | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| R&D % of Revenue | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - |
| Other Operating Expenses | 0 | 0 | 6M | 0 | 10M | 7M | 321M | 128M | 0 | 0 | 0 | 0 | -3M | -2M | -3M |
| Operating Income | -161M | -81M | 113M | 140M | 131M | 9M | -420M | -83M | 73M | -41M | -222M | -510M | 181M | 224M | 168M |
| Operating Margin % | -4.73% | -2.87% | 4.76% | 6.03% | 6.13% | 0.55% | -25.94% | -2.81% | 2.33% | -1.55% | -10.54% | -16.94% | 4.41% | 5.21% | 4.92% |
| Operating Income Growth % | - | -171.68% | -19.29% | 6.87% | 1355.56% | 102.14% | -406.02% | -213.7% | 278.05% | 81.53% | 56.47% | -381.77% | -19.2% | 33.33% | - |
| EBITDA | -97M | -29M | 147M | 166M | 150M | 32M | -392M | -42M | 114M | 9M | -169M | -472M | 202M | 241M | 180M |
| EBITDA Margin % | -2.85% | -1.03% | 6.19% | 7.15% | 7.02% | 1.96% | -24.21% | -1.42% | 3.65% | 0.34% | -8.02% | -15.68% | 4.92% | 5.61% | 5.27% |
| EBITDA Growth % | -163.82% | -119.73% | -11.45% | 10.67% | 368.75% | 108.16% | -833.33% | -136.84% | 1166.67% | 105.33% | 64.19% | -333.66% | -16.18% | 33.89% | - |
| D&A (Non-Cash Add-back) | 64M | 52M | 34M | 26M | 19M | 23M | 28M | 41M | 41M | 50M | 53M | 38M | 21M | 17M | 12M |
| EBIT | -161M | -81M | 119M | 140M | 141M | 16M | -99M | 45M | 73M | -41M | -222M | -117M | 181M | 222M | 165M |
| Net Interest Income | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Interest Income | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Interest Expense | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Other Income/Expense | -29M | -19M | 1M | -2M | 8M | 3M | -10M | -10M | -15M | -11M | -8M | -8M | -3M | -2M | -3M |
| Pretax Income | -190M | -100M | 114M | 138M | 139M | 12M | -430M | -93M | 58M | -52M | -230M | -518M | 178M | 222M | 165M |
| Pretax Margin % | -5.58% | -3.55% | 4.8% | 5.95% | 6.51% | 0.74% | -26.56% | -3.15% | 1.85% | -1.96% | -10.92% | -17.21% | 4.34% | 5.17% | 4.83% |
| Income Tax | -35M | -12M | 32M | -110M | 10M | 7M | -3M | 4M | 6M | 0 | 4M | -16M | 62M | 75M | 57M |
| Effective Tax Rate % | 18.42% | 12% | 28.07% | -79.71% | 7.19% | 58.33% | 0.7% | -4.3% | 10.34% | 0% | -1.74% | 3.09% | 34.83% | 33.78% | 34.55% |
| Net Income | -155M | -89M | 81M | 247M | 128M | 5M | -427M | -97M | 52M | -52M | -234M | -502M | 116M | 147M | 108M |
| Net Margin % | -4.55% | -3.16% | 3.41% | 10.64% | 5.99% | 0.31% | -26.37% | -3.29% | 1.66% | -1.96% | -11.11% | -16.68% | 2.83% | 3.42% | 3.16% |
| Net Income Growth % | -291.36% | -209.88% | -67.21% | 92.97% | 2460% | 101.17% | -340.21% | -286.54% | 200% | 77.78% | 53.39% | -532.76% | -21.09% | 36.11% | - |
| Net Income (Continuing) | -155M | -88M | 82M | 248M | 129M | 5M | -427M | -97M | 52M | -52M | -234M | -502M | 116M | 147M | 108M |
| Discontinued Operations | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Minority Interest | 5M | 5M | 4M | 3M | 2M | 1M | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| EPS (Diluted) | -0.83 | -0.75 | 0.75 | 2.24 | 1.13 | 0.05 | -3.90 | -0.89 | 0.48 | -0.48 | -2.19 | -4.69 | 1.06 | 1.37 | 1.01 |
| EPS Growth % | - | -200% | -66.52% | 98.23% | 2400% | 101.16% | -338.2% | -285.42% | 200% | 78.08% | 53.3% | -542.45% | -22.63% | 35.64% | - |
| EPS (Basic) | - | -0.75 | 0.75 | 2.26 | 1.14 | 0.05 | -3.90 | -0.89 | 0.48 | -0.48 | -2.19 | -4.69 | 1.07 | 1.37 | 1.01 |
| Diluted Shares Outstanding | 186M | 118M | 107.15M | 108.42M | 111.22M | 110.49M | 109.41M | 108.78M | 109M | 107.75M | 107M | 107M | 108M | 107.06M | 107.06M |
| Basic Shares Outstanding | 186M | 118M | 106.35M | 107.4M | 110.68M | 110.4M | 109.41M | 108.78M | 108M | 107.75M | 107M | 107M | 107M | 107.06M | 107.06M |
| Dividend Payout Ratio | - | - | - | - | - | - | - | - | - | - | - | - | - | 102.72% | - |
Operating margin structural erosion
According to the most recent quarterly filings, DNOW reported a significant revenue spike to $1.2 billion in 2026Q1, representing a 97.5% growth rate, yet this top-line expansion appears disconnected from the company's historical ability to convert such volume into sustainable, profitable operational performance for shareholders.
The dramatic revenue acceleration in 2026Q1 suggests a potential shift in project-based activity or a large-scale acquisition, yet the lack of corresponding margin stability warrants caution. Investors should monitor whether this growth is driven by low-margin, high-volume commodity distribution that fails to contribute meaningfully to the bottom line.
As reported in financial statements, DNOW's gross margin plummeted to 5.2% in 2025Q4 before recovering slightly to 16.3% in 2026Q1, highlighting a volatile pricing environment that suggests limited ability to pass through inflationary costs to energy sector customers during periods of intense market competition.
The structural decline from the 22-23% range observed in previous quarters indicates that the company's pricing power may be deteriorating. This volatility suggests that DNOW remains highly susceptible to steel price fluctuations and inventory valuation adjustments, which appear to be undermining the company's core profitability profile.
Based on DNOW's reported figures, the company's SG&A expenses surged to $243 million in 2026Q1, resulting in a negative operating margin of 4.2%, which indicates that the firm is currently unable to achieve the necessary operating leverage to scale its business model effectively during periods of growth.
The inability to contain overhead costs while revenue expands suggests that the current branch network and personnel structure may be inefficiently sized for the current market environment. This trend implies that management's efforts to optimize the cost base have not yet yielded the intended operational efficiencies.
As evidenced by the 2025Q4 net loss of $161 million and the subsequent 2026Q1 loss of $44 million, DNOW's earnings quality appears compromised by significant non-operating items and inventory-related charges that make core profitability difficult to discern for institutional investors evaluating the company's long-term earnings potential.
The wide swings in net income, including the anomalous $147 million profit in 2023Q4, suggest that reported figures are heavily influenced by accounting adjustments rather than consistent operational performance. Analysts should treat these bottom-line results with skepticism until the company demonstrates a sustained period of positive, normalized net income.
While management emphasizes a fortress balance sheet, the persistent negative operating margins reported in recent quarters suggest that DNOW's business model may be fundamentally challenged by the commodity-heavy nature of its revenue mix, potentially limiting its long-term valuation relative to higher-margin industrial distribution peers.
Short-term revenue growth appears insufficient to offset the structural costs of the company's distribution network, raising concerns about the viability of its current strategy. Investors should monitor whether the shift toward Process Solutions can actually provide a margin floor or if it will continue to be overshadowed by legacy distribution headwinds.
Quick answers to the most common questions about buying DNOW stock.
For fiscal year 2025, Dnow Inc. (DNOW) reported total revenue of $2.82B. This represents a 17.4% decline compared to $3.41B in 2012.
Dnow Inc. (DNOW) reported a net loss of $89.0M for the fiscal year ending 2025.
Dnow Inc. (DNOW) reported an operating income of $-81.0M, resulting in an operating profit margin of -2.9%. This margin reflects the operational efficiency of the business before interest and taxes.
Dnow Inc. (DNOW) generated $478.0M in gross profit for the year, representing a gross profit margin of 17.0%. This demonstrates the company's core pricing power and production efficiency.