Steven Gorelik of Firebird Value Advisors makes the value case for DNOW Inc. (NYSE: DNOW), a global energy and industrial distributor of pipe, valves, fittings, pumps and MRO products spun out of National Oilwell Varco in 2014. Gorelik frames the thesis through Firebird’s quality-value-growth lens. On quality, DNOW has spent a decade consolidating its footprint — cutting U.S. energy centers from roughly 200 to about 110 while nearly doubling revenue per center and lifting margins — running an asset-light distribution model with sticky, software-integrated customer relationships and 25%+ cash returns on tangible capital even in a low-demand environment. On capital allocation, the company deployed roughly $635 million from 2020–24, mostly into bolt-on acquisitions, alongside share buybacks funded entirely from internal cash flow, keeping the balance sheet debt-free ahead of the merger. Growth has come from ~10% annual revenue gains since the 2020 trough and a fast-growing, higher-margin Process Solutions business.
The centerpiece is DNOW’s November 2025 all-stock merger with MRC Global, which more than doubled the company to roughly $5.4 billion in combined revenue and added complementary downstream and gas-utility reach. Gorelik argues the market is mispricing the combined entity: MRC’s troubled ERP migration pushed reported 2025 EBITDA negative and is masking what he estimates to be $400 million+ of normalized consolidated EBITDA once integration stabilizes. At roughly $2.4 billion, DNOW trades near a 14% two-year-forward free cash flow yield versus a ~5.2% historical average, with $300 million+ of projected 2027 free cash flow available to rapidly pay down merger debt. His base case values the stock at about $34.55 per share by 2029 against a ~$13.35 entry — a roughly 37% IRR — with additional upside if oil and gas investment recovers toward prior peaks. The presentation also details key risks around ERP execution, commodity cyclicality, synergy delivery, and the post-merger balance sheet.
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