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Dril-Quip (DRQ) Up 28.7% Since Last Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Dril-Quip (DRQ - Free Report) . Shares have added about 28.7% in that time frame, outperforming the S&P 500.

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

Dril-Quip Q4 Earnings & Revenues Miss Estimates

Dril-Quip reported a fourth-quarter 2021 adjusted loss per share of 46 cents, wider than the Zacks Consensus Estimate of a loss of 14 cents. The bottom line deteriorated from the year-ago loss of 12 cents per share.

It registered total revenues of $78 million for the quarter, lower than $87 million in the year-ago period. The top line also missed the Zacks Consensus Estimate of $93 million.

The weak quarterly results were caused by a decline in product revenues as a result of lower subsea product volumes in the Western Hemisphere and downhole tool product revenues in the Middle East.

Fourth-Quarter Performance

Dril-Quip reported product bookings of $79.8 million for the quarter. At the quarter-end, it had $210.1 million in backlog.

The company reported a fourth-quarter operating loss of $71.7 million, wider than a loss of $11.6 million in the prior-year period.

Total Costs and Expenses

On the cost front, the cost of sales declined to $61.2 million for the reported quarter from $64.1 million in the year-ago period. Engineering and product development costs contracted to $3.8 million for the quarter from the year-ago figure of $4 million. SG&A costs, however, bumped up to $30.6 million from $26.2 million a year ago.

Total cost and expenses for the quarter was $149.6 million compared with $99 million a year ago.

Free Cash Flow

Dril-Quip’s free cash flow for the fourth quarter was $2.6 million against a deficit of $18.5 million a year ago.

Financials

The company recorded $2.1 million in capital expenditure for the quarter versus the year-ago level of $1.7 million.

As of Dec 31, 2021, its cash balance was $355.5 million. It had total available liquidity of $384.4 million. The company’s balance sheet is free of debt load, which highlights a sound financial position.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review.

The consensus estimate has shifted -68.42% due to these changes.

VGM Scores

At this time, Dril-Quip has a poor Growth Score of F, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% 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

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Dril-Quip has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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