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TheStreet Open House

Why Dril-Quip (DRQ) Stock Is Gaining On Thursday

Stocks in this article: DRQ

NEW YORK (TheStreet) -- Shares of Dril-Quip Inc. (DRQ) are higher by 3.64% to $105.48 today after the company announced its $100 million stock repurchase plan.

The company which designs, manufacturers, sells, and services offshore drilling and production equipment, said the repurchase plan has no set expiration date.

The company said the program does not require it to buy and particular amount of common stock and that any repurchased shares are expected to be canceled.

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Separately, TheStreet Ratings team rates DRIL-QUIP INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate DRIL-QUIP INC (DRQ) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, revenue growth, largely solid financial position with reasonable debt levels by most measures, expanding profit margins and increase in stock price during the past year. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • DRIL-QUIP INC has improved earnings per share by 6.1% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, DRIL-QUIP INC increased its bottom line by earning $4.16 versus $2.94 in the prior year. This year, the market expects an improvement in earnings ($4.91 versus $4.16).
  • Despite its growing revenue, the company underperformed as compared with the industry average of 11.2%. Since the same quarter one year prior, revenues slightly increased by 5.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • DRQ has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 4.38, which clearly demonstrates the ability to cover short-term cash needs.
  • 49.48% is the gross profit margin for DRIL-QUIP INC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 20.88% is above that of the industry average.
  • The stock price has risen over the past year, but, despite its earnings growth and some other positive factors, it has underperformed the S&P 500 so far. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
  • You can view the full analysis from the report here: DRQ Ratings Report
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