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Dril-Quip (DRQ) Down 4.7% Since Last Earnings Report: Can It Rebound?

It has been about a month since the last earnings report for Dril-Quip (DRQ). Shares have lost about 4.7% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Dril-Quip due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Dril-Quip Q1 Earnings Beat on Key Market Contributions

Dril-Quipreported a first-quarter adjusted loss of 1 cent per share, narrower than the Zacks Consensus Estimate of a loss of 2 cents. The bottom line improved from the year-ago loss of 29 cents per share.

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The company’s total quarterly revenues of $91 million increased from the year-ago quarter’s $83 million.

Strong quarterly results were supported by improved performance of key offshore markets and some reemerging areas.

Q1 Performance

Dril-Quip reported net bookings of $53.5 million for the quarter. DRQ’s first-quarter backlog rose 6% year over year, thanks to the increase in product bookings following improvement in market conditions.

The company reported a first-quarter operating income of $3.2 million, improving from a loss of $5.6 million in the prior-year period.

Total Costs and Expenses

The cost of sales increased to $65.5 million in the reported quarter from almost $64 million in the year-ago period. However, engineering and product development costs contracted to $3.4 million from the year-ago figure of $3.7 million. Selling, general and administrative costs increased to $22.6 million from $22.4 million a year ago.

Total costs and expenses in the quarter were $87.7 million compared with $88.7 million a year ago.

Free Cash Flow

In the first quarter, Dril-Quip generated a negative free cash flow of $58.3 million compared with $13 million a year ago.

Financials

Dril-Quip recorded $5.4 million in capital expenditure for the quarter.

As of Mar 31, 2023, the company’s cash balance was $235.3 million. Its balance sheet is free of debt load, highlighting a sound financial position.

Guidance

For 2023, Dril-Quip expects product bookings to increase 10-20% year over year. DRQ revealed its capital expenditure guidance of $25-$30 million for the year, indicating an increase from the $18.9 million reported in 2022.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.

VGM Scores

Currently, Dril-Quip has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. However, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Dril-Quip has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Dril-Quip is part of the Zacks Oil and Gas - Mechanical and and Equipment industry. Over the past month, USA Compression Partners (USAC), a stock from the same industry, has gained 2.8%. The company reported its results for the quarter ended March 2023 more than a month ago.

USA Compression reported revenues of $197.12 million in the last reported quarter, representing a year-over-year change of +20.6%. EPS of -$0.01 for the same period compares with -$0.09 a year ago.

For the current quarter, USA Compression is expected to post earnings of $0.05 per share, indicating a change of +266.7% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.

USA Compression has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Dril-Quip, Inc. (DRQ) : Free Stock Analysis Report

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