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Why Is Dril-Quip (DRQ) Down 3.5% Since its Last Earnings Report?

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A month has gone by since the last earnings report for Dril-Quip, Inc. (DRQ - Free Report) . Shares have lost about 3.5% in that time frame.

Will the recent negative trend continue leading up to its next earnings release, or is DRQ 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 catalysts.

Fourth-Quarter 2017 Results

Dril-Quip reported fourth-quarter 2017 adjusted earnings per share of a penny that fell below the Zacks Consensus Estimate of 3 cents and the year-ago quarter profit of 23 cents, thanks to higher expenses. 

The company registered total revenues of $107.9 million in the quarter compared with $106 million a year ago. The reported figure also surpassed the Zacks Consensus Estimate of $102 million.

Operating loss of $5.1 million was wider than the year-earlier loss of $4.6 million. 

On the cost front, selling, general and administrative expenses increased from the year-earlier level of approximately $21.7 million to about $31.1 million. Engineering and product development costs, however, declined 15% year over year. Dril-Quip’s total cost and expenses during the quarter totaled $113.1 million, compared with $110.7 million in the year-ago quarter.

Cash Flow

As of Dec 31, 2017, the cash balances of the company rose to $493.2 million. The rise in Dril-Quip’s cash balances was driven by $25.2 million free cash flow earned in the October to December period. The balance sheet of the company is also free from debt load, reflecting a sound financial position. In fact, the company expects no headwinds to hinder its long-term growth plan.

Guidance

Dril-Quip projects revenues in 2018 in the range of $380-$420 million. The company anticipates its backlog to rise through 2018 with crude likely to hover in the healthy band of $55-$65 per barrel.

How Have Estimates Been Moving Since Then?

Fresh estimates followed an upward path over the past two months. In the past month, consensus estimates have shifted downward by 46.4% due to these changes.

Dril-Quip, Inc. Price and Consensus

 

Dril-Quip, Inc. Price and Consensus | Dril-Quip, Inc. Quote

VGM Scores

Currently, DRQ has a poor Growth Score of F, however its Momentum is doing a bit better with a D. The stock was also 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.

Our style scores indicate investors will probably be better served looking elsewhere.

Outlook

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


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