What happened?

Shares of NOW (NYSE:DNOW) declined 13% in March. The drop in price is a continuation of the decline that started just after the company released fourth-quarter and year-end results on Feb. 14.

Oil pump jack at sunset

Image source: Getty Images.

So what?

Ever since NOW reported earnings, Wall Street has found every reason possible to sell shares. Its stock is now down 25% since that release. What is strange about this situation, though, is that it's hard to see why there is such little faith in NOW's ability to capture part of the recovery that is happening in the oil and gas industry

In fact, if you look at the company's earnings report, it would appear that its results are actually outpacing the general recovery in the industry. U.S. sales for the fourth quarter were down 12% year over year even though the U.S. land-rig count was 22% lower in Q4 2016 than in Q4 2015. Similarly, sales for the company outpaced the rate of recovery -- or decline, depending on the region -- in its other reporting segments. 

Now what?

This recovery we're in currently isn't going to happen on a straight track. We're even experiencing a bit of a hiccup today as crude oil inventories build and the price of crude oil remains stuck around $50 a barrel. This is likely to happen for shares of NOW as well, as the euphoria of rising rig counts can be easily forgotten with some bad news elsewhere in the industry.

For those with a long-term investment thesis, it can be challenging to look beyond these short-term price drops, especially when they can be so drastic. Here's the thing to keep in mind, though: The oil market is in a slow, bumpy recovery, and NOW is the company looking to supply that recovery with equipment and parts. With shares trading where they are, it may be worth considering adding to a position. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.