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Dril-Quip (DRQ) Down 15.7% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Dril-Quip (DRQ - Free Report) . Shares have lost about 15.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Dril-Quip due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Dril-Quip’s Q4 Earnings and Revenues Beat Estimates
Dril-Quip, Inc. reported fourth-quarter 2019 adjusted earnings per share of 23 cents, beating theZacks Consensus Estimate of 12 cents. The company had reported a loss of 4 cents in the year-ago quarter.
It registered total revenues of $108.5 million in the quarter compared with around $97 million in the year-ago period. Also, the figure beat the Zacks Consensus Estimate of $104 million.
The strong quarterly results were aided by its realigned sales organization and reduced operating expenses as a result of cost-saving initiatives. Moreover, a rise in fabricated joint revenues boosted quarterly numbers.
Fourth-Quarter Performance
Dril-Quip reported product bookings of $101 million in the quarter. The reported figure was above the higher end of its guided range of $75-$95 million. Notably, the company’s new products fetched 13% of full-year 2019 product bookings of $388 million.
Operating income of $6.1 million significantly improved from a loss of $98.8 million in the prior-year quarter.
Total Costs and Expenses Decline
On the cost front, cost of sales jumped to $75.7 million in the reported quarter from $68.7 million in the year-ago period. Selling, general and administrative expenses declined to $21.4 million from the year-ago level of $25 million. Engineering and product development costs fell to $4.8 million in the quarter from the year-ago level of $9.3 million. Total cost and expenses during the quarter totaled $102.4 million compared with $196.2 million in the year-ago period. The company’s cost-saving initiatives, which commenced last year, helped it to reduce expenses.
Share Buyback
In the fourth quarter, the company repurchased 490,052 shares under the stock buyback program (approved on Feb 26, 2019) at an average price of $43.25 per share, totaling $21.2 million. In full-year 2019, it bought back 615,940 shares and returned $26.6 million to its shareholders.
Free Cash Flow
Dril-Quip’s free cash flow in the fourth quarter was $5.2 million versus negative $8 million in the year-ago period.
Backlog
At the end of fourth-quarter 2019, the company had $272 million in backlog, up from $270 million as of Dec 31, 2018.
Financials
The company recorded $2.9 million capital expenditure in the quarter, lower than the year-ago level of $5.4 million.
As of Dec 31, 2019, its cash balance was $399 million. Also, the balance sheet of the company is free from debt load, which indicates sound financial position. In fact, it expects no headwinds to dent long-term growth plan.
Guidance
For first-quarter 2020, the company expects product bookings in the range of $85-$105 million. It expects revenues within $95-$105 million, as its Singapore operations got disrupted due to quarantines and travel bans following the coronavirus outbreak. Also, the company expects to record positive free cash flow for the current year.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -82.93% due to these changes.
VGM Scores
At this time, Dril-Quip has an average Growth Score of C, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Dril-Quip has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Dril-Quip (DRQ) Down 15.7% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Dril-Quip (DRQ - Free Report) . Shares have lost about 15.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Dril-Quip due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Dril-Quip’s Q4 Earnings and Revenues Beat Estimates
Dril-Quip, Inc. reported fourth-quarter 2019 adjusted earnings per share of 23 cents, beating theZacks Consensus Estimate of 12 cents. The company had reported a loss of 4 cents in the year-ago quarter.
It registered total revenues of $108.5 million in the quarter compared with around $97 million in the year-ago period. Also, the figure beat the Zacks Consensus Estimate of $104 million.
The strong quarterly results were aided by its realigned sales organization and reduced operating expenses as a result of cost-saving initiatives. Moreover, a rise in fabricated joint revenues boosted quarterly numbers.
Fourth-Quarter Performance
Dril-Quip reported product bookings of $101 million in the quarter. The reported figure was above the higher end of its guided range of $75-$95 million. Notably, the company’s new products fetched 13% of full-year 2019 product bookings of $388 million.
Operating income of $6.1 million significantly improved from a loss of $98.8 million in the prior-year quarter.
Total Costs and Expenses Decline
On the cost front, cost of sales jumped to $75.7 million in the reported quarter from $68.7 million in the year-ago period. Selling, general and administrative expenses declined to $21.4 million from the year-ago level of $25 million. Engineering and product development costs fell to $4.8 million in the quarter from the year-ago level of $9.3 million. Total cost and expenses during the quarter totaled $102.4 million compared with $196.2 million in the year-ago period. The company’s cost-saving initiatives, which commenced last year, helped it to reduce expenses.
Share Buyback
In the fourth quarter, the company repurchased 490,052 shares under the stock buyback program (approved on Feb 26, 2019) at an average price of $43.25 per share, totaling $21.2 million. In full-year 2019, it bought back 615,940 shares and returned $26.6 million to its shareholders.
Free Cash Flow
Dril-Quip’s free cash flow in the fourth quarter was $5.2 million versus negative $8 million in the year-ago period.
Backlog
At the end of fourth-quarter 2019, the company had $272 million in backlog, up from $270 million as of Dec 31, 2018.
Financials
The company recorded $2.9 million capital expenditure in the quarter, lower than the year-ago level of $5.4 million.
As of Dec 31, 2019, its cash balance was $399 million. Also, the balance sheet of the company is free from debt load, which indicates sound financial position. In fact, it expects no headwinds to dent long-term growth plan.
Guidance
For first-quarter 2020, the company expects product bookings in the range of $85-$105 million. It expects revenues within $95-$105 million, as its Singapore operations got disrupted due to quarantines and travel bans following the coronavirus outbreak. Also, the company expects to record positive free cash flow for the current year.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -82.93% due to these changes.
VGM Scores
At this time, Dril-Quip has an average Growth Score of C, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Dril-Quip has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.