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Dril-Quip (DRQ) Shares Jump 22.4% Since Q3 Earnings Beat

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Dril-Quip, Inc. (DRQ - Free Report) stock jumped 22.4% since it reported third-quarter results on Oct 29. Its terrific measures to navigate through the current market uncertainties with a strong balance sheet have been appreciated by investors.

Dril-Quip reported third-quarter 2020 adjusted earnings per share of 44 cents versus the Zacks Consensus Estimate of a loss of 3 cents. In the year-ago period, the company reported a loss of 7 cents per share. The strong quarterly earnings were supported by lower cost and expenses. Moreover, its excellent performance in Europe and Asia boosted the bottom line.

It registered total revenues of $91.3 million for the quarter, lower than $108.2 million in the year-ago period. However, the figure beat the Zacks Consensus Estimate of $88 million.

DrilQuip, Inc. Price, Consensus and EPS Surprise

DrilQuip, Inc. Price, Consensus and EPS Surprise

DrilQuip, Inc. price-consensus-eps-surprise-chart | DrilQuip, Inc. Quote

Third-Quarter Performance

Dril-Quip reported product bookings of $50.2 million for the quarter. Although the coronavirus pandemic has dented global energy demand and weakened commodity pricing scenario, which in turn affected product booking, the company’s excellent performance in Europe and Asia offset the negatives. Notably, a massive chunk of the bookings was from the Eastern Hemisphere. State-owned and large integrated energy companies made those bookings.

Notably, the company recorded third-quarter operating loss of $2.1 million against a profit of $222 thousand in the prior-year quarter.

Total Costs and Expenses

On the cost front, cost of sales declined to $67.2 million for the reported quarter from $76 million in the year-ago period. Engineering and product development costs, however, rose to $4 million for the quarter from the year-ago figure of $3.8 million. Total cost and expenses for the quarter totaled $93.4 million compared with $108 million a year ago.

Free Cash Flow

Dril-Quip’s free cash flow for the third quarter was $12 million. For third-quarter 2019, the company’s free cash flow was recorded at negative $8 million.

Backlog

At third quarter-end, it had $222 million in backlog, down from $273 million as of Dec 31, 2019.

Financials

Dril-Quip recorded $1.9 million capital expenditure for the quarter, lower than the year-ago level of $4 million.

As of Sep 30, 2020, its cash balance was $359.2 million. It had total available liquidity of $403.8 million. The company’s balance sheet is free of debt load, which highlights a sound financial position.

Guidance

For 2020, the leading manufacturer of highly engineered drilling and production equipment expects product booking worth $200 million. The coronavirus pandemic has caused massive demand destruction all around the globe, which has created challenges for the company. The challenges are expected to remain until 2021. The company is ready to navigate through the uncertainties, supported by balance sheet strength.

Zacks Rank & Stocks to Consider

The company currently has a Zacks Rank #3 (Hold). Some better-ranked players in the energy space include Matador Resources Company (MTDR - Free Report) , Antero Resources Corporation (AR - Free Report) and Global Partners LP (GLP - Free Report) , each holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Matador Resources’ bottom line for 2021 is expected to surge 187% year over year.

Antero Resources’ bottom line for 2021 is expected to rise 30.5% year over year.

Global Partners’ bottom line for 2020 is expected to rise 118.1% year over year.

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