Dril-Quip (DRQ) Q3 Earnings Beat Estimates, Decline Y/Y

Dril-Quip Inc (NYSE:DRQ) reported third-quarter 2017 adjusted earnings of 5 cents per share that surpassed the Zacks Consensus Estimate of a loss of 2 cents. The outperformance was mainly due to the company’s cost-savings initiatives. However, quarterly earnings decreased from 39 cents a year ago due to higher expenses.

The company registered total revenues of $100.3 million in the quarter compared with $123.6 million a year ago. The reported figure, however, lagged the Zacks Consensus Estimate of $105 million.

Operating loss of $62 million decreased substantially from the year-earlier operating income of $23 million.

On the cost front, selling, general and administrative expenses increased from the year-earlier level of approximately $12.5 million to about $28 million. Engineering and product development costs declined 1.8% year over year. Dril-Quip’s total cost and expenses during the quarter totaled $162.4 million, compared with $100.7 million in the year-ago quarter.

Cash Flow

The company’s cash position grew significantly in the third quarter due to free cash flow generation of $29.4 million and a debt-free balance sheet compared with $19.1-million free cash flow in second-quarter 2017. This will aid the company to execute its long-term strategies of acquiring potential assets and repurchasing existing shares in the market. The company also intends to invest in research and development in the future.

Q3 Price Performance

The pricing chart reveals that the company’s shares have underperformed the industry in the last three months. During this period, the company’s shares have lost 9.5% as against the industry’s rally of 6.3%.

Zacks Rank & Key Picks

Currently, Dril-Quip carries a Zacks Rank #3 (Hold). A few better-ranked players in the energy sector include Northern Oil and Gas Inc (NYSE:NOG) , Braskem SA (NYSE:BAK) and Noble Midstream Partners LP (NYSE:NBLX) . All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Northern Oil and Gas, based in Minnetonka, MN, is an independent energy company. The company delivered earnings surprise of 100.00% in the preceding quarter.

The largest petrochemical operator in Latin America, Braskem, delivered an average positive earnings surprise of 88.17% in the last four quarters.

Noble Midstream Partners, headquartered in Houston, TX, has diversified energy infrastructure properties. The company delivered positive earnings surprise of 30.67% in the preceding quarter.

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