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Trade-Ideas LLC identified

Dril-Quip

(

DRQ

) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Dril-Quip as such a stock due to the following factors:

  • DRQ has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $17.3 million.
  • DRQ has traded 61,970 shares today.
  • DRQ is trading at 7.76 times the normal volume for the stock at this time of day.
  • DRQ is trading at a new low 4.06% below yesterday's close.

'Weak on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as material stock news, analyst downgrades, insider selling, selling from 'superinvestors,' or that hedge funds and traders are piling out of a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize (or avoid losses by trimming weak positions). In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on DRQ:

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TheStreet Recommends

Dril-Quip, Inc., together with its subsidiaries, designs, manufactures, sells, and services offshore drilling and production equipment for use in deepwater, harsh environment, and severe service applications worldwide. DRQ has a PE ratio of 12. Currently there is 1 analyst that rates Dril-Quip a buy, 2 analysts rate it a sell, and 9 rate it a hold.

The average volume for Dril-Quip has been 365,900 shares per day over the past 30 days. Dril-Quip has a market cap of $2.1 billion and is part of the basic materials sector and energy industry. The stock has a beta of 0.33 and a short float of 7.4% with 8.23 days to cover. Shares are down 6.5% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Dril-Quip as a

hold

. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, expanding profit margins and notable return on equity. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, weak operating cash flow and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:

  • 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 7.16, which clearly demonstrates the ability to cover short-term cash needs.
  • 48.77% 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.
  • DRQ, with its decline in revenue, slightly underperformed the industry average of 21.6%. Since the same quarter one year prior, revenues fell by 26.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The share price of DRIL-QUIP INC has not done very well: it is down 8.82% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • DRIL-QUIP INC's earnings per share declined by 29.7% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, DRIL-QUIP INC reported lower earnings of $4.99 versus $5.21 in the prior year. For the next year, the market is expecting a contraction of 48.1% in earnings ($2.59 versus $4.99).

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