It has been about a month since the last earnings report for Dril-Quip, Inc. (DRQ - Free Report) . Shares have added about 4.1% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is DRQ 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, 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.
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.
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.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. There have been three revisions lower for the current quarter.
At this time, DRQ has a poor Growth Score of F, a grade with the same score on the momentum front. 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.
Our style scores indicate investors will probably be better served looking elsewhere.
Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Interestingly, DRQ has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.