Dril-Quip Is Great, but So Are the Expectations
What's more, that Anadarko
When factoring share-price gains of 160% over the past three years, if I'm ever pressured to pick one word to describe Dril-Quip, that word would be "great." But the company's greatness has only been matched by the Street's expectations.
Even so, the difference is, unlike many of its rivals, Dril-Quip management, which has already raised guidance multiple times this year, has always delivered. It's true that at a P/E of 30, which is 6 points higher than its five-year average, this stock is not cheap. But with stronger-than-expected demand coming in from offshore energy development, not to mention the stabilizing of oil and gas prices, I still see ample opportunities here for investors looking to play an energy rebound.
Given the third-quarter results seen from Cameron International
Third-quarter revenues were up 18% year over year to $225 million, which outperformed Cameron's revenue results by 5%. What really caught my attention, though, was the 54% year-over-year jump in Dril-Quip's backlog. Now, given that I cited Cameron's 50% backlog increase as a defense against a couple of bearish attacks, it's only fair that Dril-Quip's backlog outperformance supports a bullish outlook.
And let's not forget, there was a point when the Street had raised concerns about Dril-Quip's business immediately after General Electric's
One thing that I've always appreciated about this company is its capital-preservation strategies, which includes acquiring second-hand/refurbished equipment. This is in lieu of leveraging the company to a high annual expense budget. In other words, management has never been impressed by "shiny and new." Profits and operational efficiency has always remained the focus.