Forensic Analysis · Industrials / Manufacturing / Defense · as of Jun 27, 2026
DNOW Inc. (DNOW)
A forensic read on DNOW Inc. built from its complete SEC filings — financial-health screens, earnings quality, red flags and a price-aware rating. Reproducible math, not opinion.
C · Mixed — selective
Forensic grade
Safe
Financial health
2.7
Altman Z-score
Watch
Earnings quality
6
Forensic signals
-9.2%
ROE
$2.5B
Market cap
DNOW Inc. earns a C (Mixed — selective) forensic quality grade, and its Altman Z-score is 2.7, placing it in the Safe zone. 6 forensic signals were flagged in its latest SEC filings, led by accruals ratio.
What the filings flag
+96.1%Accruals ratio. Net operating assets grew +96.1% relative to their average in FY2025 — the accrual component of earnings. Accruals are building sharply — a large slice of profit sits in operating assets, not cash; Richardson/Sloan link high accruals to weaker future returns as they reverse. The cash-flow cross-check agrees: reported earnings ran behind operating cash by -15% of net operating assets.
113d DSOReceivables vs revenue. Days sales outstanding moved from 60 to 113 days FY2024→FY2025 (receivables +125% vs revenue +19%). Receivables are outrunning sales — a flag for aggressive revenue recognition or slipping collections.
186dInventory days. Days inventory outstanding moved from 70 to 186 FY2024→FY2025 (against cost of goods sold; inventory +239% vs +27% in cost of sales). Inventory is outrunning what's being sold — a flag for softening demand or obsolescence risk ahead.
-3%Return on invested capital. Return on invested capital is -3% and slipping from 18% — well below its ~9% cost of capital, so reinvested dollars may be destroying value, not building it.
+2.0%/yrShare-count dilution. Diluted share count changed +6% over the last 3 years to FY2025 (+2.0%/yr). The count is GROWING — existing holders are being diluted. That's ~2.0% shaved off per-share growth every year — total profit has to grow that much just to keep earnings-per-share flat, and a stake held since FY2022 has been diluted ~6%.
1% of revStock-based comp load. Stock-based compensation ran 1% of revenue and 22% of free cash flow in FY2025 — about $0.25 per diluted share. Meaningful — reported free cash flow flatters the economics, since SBC is a real cost paid in shares.
Key fundamentals
Net Margin-3.2%
Debt / Equity0.20x
Free Cash Flow$134.0M
Latest Revenue$2.82B
Return on Equity-4.0%
Revenue Growth YoY+18.8%
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🔒Interactive valuation — reverse-DCF sliders, Monte Carlo & scenario stress
🔒Calibrated 12-month price forecast, with the math shown
🔒Peer comparison + filing-change monitoring & alerts
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Data from SEC EDGAR public filings · metrics as of Jun 27, 2026. Forensic signals flag probability, not certainty.