NEW YORK (
) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, increase in net income, growth in earnings per share and expanding profit margins. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.
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Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 12.3%. Since the same quarter one year prior, revenues rose by 28.7%. Growth in the company's revenue appears to have helped boost 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 3.14, which clearly demonstrates the ability to cover short-term cash needs.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Energy Equipment & Services industry. The net income increased by 32.9% when compared to the same quarter one year prior, rising from $21.67 million to $28.80 million.
- DRIL-QUIP INC has improved earnings per share by 31.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, DRIL-QUIP INC reported lower earnings of $2.37 versus $2.55 in the prior year. This year, the market expects an improvement in earnings ($2.90 versus $2.37).
- 43.00% is the gross profit margin for DRIL-QUIP INC which we consider to be strong. Regardless of DRQ's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, DRQ's net profit margin of 16.30% compares favorably to the industry average.
Dril-Quip, Inc. designs, manufactures, sells, and services engineered offshore drilling and production equipment for use in deepwater, harsh environment, and severe service applications worldwide. The company has a P/E ratio of 28.4, equal to the average energy industry P/E ratio and above the S&P 500 P/E ratio of 17.7. Dril-Quip has a market cap of $2.89 billion and is part of the
industry. Shares are up 11.8% year to date as of the close of trading on Monday.
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-- Written by a member of TheStreet Ratings Staff
TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.