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Dril-Quip (DRQ) Q1 Earnings Miss Estimates, Stock Plummets

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Dril-Quip, Inc.’s (DRQ - Free Report) stock has declined 7% since the company reported first-quarter 2018 adjusted loss of 24 cents per share, which fell below the Zacks Consensus Estimate for earnings of one penny and the year-ago quarter figure of 5 cents. 

The company registered total revenues of $99.2 million in the quarter compared with $119.2 million a year ago. However, the reported figure surpassed the Zacks Consensus Estimate of $97.9 million.

First-quarter results were affected by sequential declines in revenues from the Western Hemisphere and Asia-Pacific, partially offset by lower expenses and cost saving initiatives.

Dril-Quip, Inc. Price, Consensus and EPS Surprise

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

Cost and Expenses

On the cost front, selling, general and administrative expenses increased from the year-earlier level of approximately $25.8 million to about $28.3 million. Engineering and product development costs, however, declined 20.3% year over year to $9.4 million. Dril-Quip’s total cost and expenses during the quarter totaled $105.5 million, compared with $120.1 million in the year-ago quarter.

Operating loss of $6.3 million was wider than the year-earlier loss of $0.9 million. 

Balance Sheet

As of Mar 31, 2018, cash balances of the company rose to $495.6 million. Moreover, the company entered into a new ABL facility on Feb 23, 2018, bringing its available liquidity to $559.6 million. Also, 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.


Dril-Quip projects revenues in 2018 within the range of $380-$400 million. The company anticipates its backlog — $266.7 million as of Mar 31, 2018 — to rise through 2018, with crude likely to hover in the healthy band of $60-$70 per barrel.

Zacks Rank and Stocks to Consider

Houston, TX-based Dril-Quip currently carries a Zacks Rank #3 (Hold).

Investors interested in the Energy sector can opt for some better-ranked stocks in the same space like EOG Resources, Inc. (EOG - Free Report) , Oasis Midstream Partners LP (OMP - Free Report) and CNOOC Limited (CEO - Free Report) . While EOG Resources and Oasis Midstream sport a Zacks Rank #1 (Strong Buy), CNOOC carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Houston, TX-based EOG Resources is an upstream energy company. For 2018, the bottom line is likely to be up 35%. In the last four reported quarters, the company delivered a positive average surprise of 25.7%.

Houston, TX-based Oasis Midstream is an integrated energy partnership. The company’s revenues for 2018 are anticipated to improve 29.3% from the prior-year quarter, while its earnings are expected to increase 337.2%.

Hong Kong-based CNOOC is an integrated energy company. The company’s top line for 2018 is anticipated to improve 49% year over year, while its bottom line is expected to increase 82.8%.

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