$DNOW: the boring distributor that could double on 2029 numbers | Firebird Management

Watch on YouTube ↗  |  August 14, 2026 at 14:28  |  47:35  |  Yet Another Value Podcast
Speakers
Steve Gorelik — Firebird Management
Andrew Walker — Host, Yet Another Value Blog

Summary

Andrew Walker interviews Steve Gorelik of Firebird Management about DNOW, an oil and gas distributor spun out of National Oilwell Varco. Steve argues that DNOW has survived a decade-long oil and gas capex headwind and is now positioned for recovery, with rig counts rising, MRC Global synergies, low capex, and about $300 million of potential free cash flow on a $3 billion market cap. They debate valuation, ERP integration risk, buybacks, private equity interest, and distributor peers such as Wesco and Fastenal, with Steve's 2029 case at $30-$32 per share.

  • DNOW spun off from NOV in 2014 and has faced falling US rig counts and global oil/gas investment headwinds.
  • Steve sees rig recovery, tight oil supply, and MRC Global synergies driving EBITDA and free cash flow.
  • The valuation debate centers on 10x 2027 EBITDA and potential re-rating to a historical 5-6% free cash flow yield.
  • MRC's inherited Oracle ERP issues are stabilizing; DNOW will run SAP and Oracle side by side.
  • Management has bought back stock, reduced debt, and can pursue accretive bolt-ons.
  • Discussion extends to Wesco and Fastenal as distributors benefiting from data center and AI demand.
  • Steve's 2029 target is roughly $30-$32 per share.
Ideas
Steve Gorelik Firebird Management 3:47
Cheap oilfield distributor with recovering cash flow
DNOW is a misunderstood oil and gas distributor whose decade of underperformance reflects a historic oil and gas capex headwind rather than a broken business. US rigs fell from about 1,800 at the spin-off to below 600, and global oil and gas investment is roughly 40% below 2014 in real terms, yet DNOW still grew margins and profitability. The MRC Global merger adds downstream and utility exposure plus about $75 million of synergies; combined 2024 EBITDA was about $325 million, and management soft-targets $350 million of EBITDA for 2027. With low capex, DNOW could generate about $300 million of free cash flow on a roughly $3 billion market cap and $3.5 billion EV, about a 10% free cash flow yield. The market historically paid a 5-6% free cash flow yield, so a re-rating on 2027-2029 numbers could drive the stock to $30-$32 by 2029. Management is conservative, buys back stock opportunistically, has reduced debt, and can still do accretive bolt-ons at 4-5x EBITDA.
DNOW HIGH
Steve Gorelik Firebird Management 4:34
Fragmented, sticky, low-capex rollup compounders
High-quality distributors are attractive because their industries are fragmented, customers are sticky, capex is low, and low margins deter new competition. Scale players can buy mom-and-pop businesses at cheap multiples, consolidate orders, spread SG&A, and compound returns on capital. This private-equity-style rollup playbook is what DNOW is executing in oil and gas.
Industrial distribution MED
Steve Gorelik Firebird Management 43:34
Data centers accelerate electrical distributor growth
Wesco is an electrical parts distributor that Steve likes and that has become a data center play. Its sales growth accelerated from roughly 2-3% per year to 8-10% per year and the multiple expanded, illustrating how an industrial distributor can re-rate on data center and utility infrastructure demand.
WCC MED
Andrew Walker Host, Yet Another Value Blog 45:03
AI boom lifts distributor organic growth
Fastenal's organic growth has accelerated from roughly zero to high-single/low-double digits because of the AI boom, making it a distributor beneficiary of AI infrastructure demand in a more sustainable way than memory stocks.
FAST MED
Andrew Walker Host, Yet Another Value Blog 45:15
Distributors are sustainable AI beneficiaries
The AI boom is benefiting industrial distributors broadly, not just memory stocks, and the demand looks more sustainable. Distributors are increasingly levered to data center, electrical, and industrial infrastructure spending.
Industrial distributors MED
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This Yet Another Value Podcast video, published August 14, 2026, features Steve Gorelik, Andrew Walker discussing DNOW, Industrial distribution, WCC, FAST, Industrial distributors. 5 trade ideas extracted by AI with direction and confidence scoring.

Speakers: Steve Gorelik, Andrew Walker  · Tickers: DNOW, Industrial distribution, WCC, FAST, Industrial distributors