DNOW Inc. — Earnings Quality Grade F
DNOW · Industrials
Major red flags
Screening Summary
Management Signals
Source: SEC EDGAR 8-K Item 5.02, with exhibit links when available
Financial Trends
Revenue & Net Income ($B)
Margins (%)
18-Point Screening
Revenue Quality
DSO surged by 53 days (60 → 113)
AR growth 125.3% exceeds revenue growth 18.8%
Revenue grew 18.8% but CFFO declined -48.0%
Expense Quality
Inventory growth 238.6% exceeds COGS 27.1%
CapEx growth 133.3% is >2x revenue growth 18.8%
SG&A/Gross Profit = 116.9%, exceeds 70%
Gross margin swung -5.4pp (22.4% → 17.0%)
Cash Flow Quality
CFFO/NI = -1.74. Below 1.0
FCF $0.1B, FCF/NI = -1.51
Accruals ratio = -6.2%. Low accruals
Cash $0.2B covers only 28% of debt $0.6B
Balance Sheet Health
Goodwill+Intangibles $1.2B = 53% of equity. Over 50%
Debt/EBITDA = -20.2x. Healthy
Other assets grew 262.5% vs revenue 18.8%
Write-offs up 100% YoY
Acquisition Risk
FCF after acquisitions negative for 2/3 years
Goodwill+Intangibles surged 301% YoY
Manipulation Score
M-Score = -1.58 (> -1.78). LIKELY MANIPULATOR
Beneish M-Score
Altman Z-Score
Generated from public financial data using forensic accounting frameworks. Not investment advice. Data: Yahoo Finance · 2026-04-25