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Dril-Quip (DRQ) Stock Up 4.3% Since Q1 Earnings: Here's Why

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Dril-Quip, Inc.’s (DRQ - Free Report) shares jumped 4.3% despite weak first-quarter results, announced on Apr 29, due to customer pushouts in Asia and Europe. Investors were impressed by the fact that the company’s product bookings for the quarter were close to the higher end of the guided range of $40-$60 million. Moreover, it managed to keep the balance sheet debt free despite energy market volatility caused by the coronavirus pandemic.

The company reported first-quarter 2021 adjusted loss per share of 47 cents, wider than the Zacks Consensus Estimate of a loss of 3 cents. In the year-ago period, the company reported a profit of 26 cents per share.

It registered total revenues of $81.2 million for the quarter, lower than $96 million in the year-ago period. Moreover, the figure missed 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

First-Quarter Performance

Dril-Quip reported product bookings of $57 million for the quarter. At quarter-end, it had $197 million in backlog. The company recorded first-quarter operating loss of $31.6 million, narrower than a loss of $42.3 million in the prior-year period.

For the first quarter, the downhole tools product line recorded the highest revenues since its acquisition in 2016.

Total Costs and Expenses

On the cost front, cost of sales declined to $56,8 million for the reported quarter from $71.4 million in the year-ago period. Moreover, engineering and product development costs fell to $4 million for the quarter from the year-ago figure of $5.5 million. Total cost and expenses for the quarter totaled $112.8 million compared with $138.3 million a year ago.

Free Cash Flow

Dril-Quip’s free cash flow for the first quarter was $10.6 million. For first-quarter 2020, the company’s free cash outflow was recorded at $25.4 million.

Financials

Dril-Quip recorded $2.5 million capital expenditure for the quarter versus the year-ago level of $4.2 million.

As of Mar 31, 2021, its cash balance was $362.2 million, up from $346 million at fourth quarter-end. It had total available liquidity of $397.6 million. The company’s balance sheet is free of debt load, which highlights a sound financial position.

Guidance

For 2021, the leading manufacturer of highly engineered drilling and production equipment reiterated its expectation of product bookings of $40-$60 million per quarter. Capital expenditure for the year is expected within $15-$17 million. Revenues for 2021 are expected to be flat or a bit lower than the 2020 level of $365 million.

The company added that the business scenario, which suffered due to the coronavirus pandemic, is in recovery mode. This will boost oil and gas demand. Even though the effects of the pandemic are slowly easing, it is still impacting the timing of rig schedules, especially in international markets.

Zacks Rank & Stocks to Consider

The company currently has a Zacks Rank #3 (Hold). Some better-ranked players in the energy space include National Energy Services Reunited Corp. (NESR - Free Report) , NOW Inc. (DNOW - Free Report) and Hess Corporation (HES - Free Report) , each having a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

National Energy’s bottom line for 2021 is expected to rise 52.31% year over year.

NOW Inc.’s bottom line for 2021 is expected to rise 50.77% year over year.

Hess’ bottom line for 2021 is expected to surge 150.9% year over year.

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Hess Corporation (HES) - free report >>

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