Shares of DNOW Inc. (NYSE: DNOW) plummeted 5.12% in intraday trading on Wednesday, despite the company reporting better-than-expected second-quarter earnings. The sharp decline suggests investors may be focusing on other aspects of the company's financial performance and outlook.

DNOW reported adjusted earnings of $0.27 per share for the quarter ended June 30, surpassing the analyst consensus estimate of $0.21 by 26.76%. This represents an 8% increase from $0.25 per share in the same period last year. However, the company's revenue fell 0.8% year-over-year to $628 million, although it still beat the analyst expectations of $612.60 million.

The stock's negative reaction despite the earnings beat could be attributed to several factors. First, the slight decline in revenue may be concerning investors about the company's growth prospects. Additionally, the increase in LIFO reserve, which rose to $10 million from $1 million in the same quarter last year, could be impacting profitability. Investors may also be reacting to the company's forward guidance or other elements in the financial report that suggest potential challenges ahead. The market's response underscores the importance of looking beyond headline numbers when assessing a company's financial health and future prospects.