Why DNOW Stock Got Rocked on Friday

The Motley Fool

by newsfeedback@fool.com (Eric Volkman)

February 20, 2026

AI-Generated Deep Dive Summary

Energy products manufacturer DNOW (NYSE: DNOW) experienced a significant drop in its stock price on Friday, falling over 19% due to underwhelming quarterly earnings. The company missed expectations on both revenue and net income, which sent shockwaves through the market and left investors concerned about its financial trajectory. Despite reporting nearly double its year-over-year revenue—$959 million compared to $571 million in 2024—the figures were largely attributed to its acquisition of MRC Global, a pipes, valves, and fittings distributor, which closed last November. However, these results failed to meet Wall Street's targets, leading to a sharp decline in shares. The company’s fourth-quarter performance revealed mixed outcomes. While revenue surged to $959 million from $571 million in the prior year, this growth was heavily influenced by the MRC Global acquisition. Excluding the impact of the acquisition, DNOW’s organic revenue growth remained modest. Additionally, net income fell short of analyst forecasts, with profits declining compared to the previous year. This discrepancy between top-line growth and bottom-line underperformance raised concerns among investors about the company's ability to generate sustainable earnings. The broader implications for finance enthusiasts lie in understanding how acquisitions can distort financial metrics and mislead stakeholders. While MRC Global contributed significantly to DNOW’s revenue growth, the lack of corresponding profit gains suggests challenges in integrating operations or achieving synergies. This outcome underscores the importance of carefully analyzing acquisition-driven growth and its impact on a company's long-term profitability. For investors, this serves as a reminder to look beyond headline numbers and delve into the details of how earnings are being generated.

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Originally published on The Motley Fool on 2/20/2026