On Jul 10, Zacks Investment Research upgraded offshore
drilling equipment maker
), to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
Dril-Quip manufactures highly engineered offshore drilling and
production equipment for deepwater severe-service applications
and harsh environmental conditions. The company designs and
manufactures subsea and surface wellheads, subsea and surface
production trees, mudline hanger systems, specialty connectors,
and associated pipe, drilling and production riser systems, and
wellhead connectors and diverters, which are used on offshore rig
The operating environment and growth prospects seem bright for
Dril-Quip, as reflected by the earnings estimates for this
leading engineering company. For the second quarter of 2013, the
Zacks Consensus Estimate currently stands at 88 cents, reflecting
year-over-year growth of 19.52%. The upswing will likely be felt
in the third quarter as well given the forecasted 33.05%
year-over-year growth and 27.26% full-year 2013 growth.
The momentum was felt earlier too, when Dril-Quip released its
first quarter earnings results on May 7. Earnings per share came
in at 98 cents, exceeding the Zacks Consensus Estimate of 80
cents by 22.50% and improving 30.66% from 75 cents a year ago.
The outperformance was mainly backed by growth in product and
service revenues as demand for offshore equipment increased.
With respect to the earnings trend, Dril-Quip delivered positive
earnings surprises in 3 of the last 4 quarters with an average
beat of 7.02%. The long-term expected earnings and sales growth
projections of 14.50% and 6.93%, respectively, are also fairly
Additionally, Dril-Quip's first quarter backlog witnessed a 16%
sequential as well as 45.8% year-over-year improvement. We also
expect large orders in 2013 from the Gulf of Mexico and Brazil,
with rising demand and activity levels in these regions. This
gives Dril-Quip the financial flexibility to take advantage of
growth opportunities while returning capital to shareholders.
Other Stocks to Consider
There are certain other equipment makers in the energy sector
that are worth considering. These include
Blueknight Energy Partners, L.P.
Energy Transfer Equity, L.P.
Gran Tierra Energy, Inc.
). All the three stocks carry a Zacks Rank #1 (Strong
BLUEKNIGHT EGY (BKEP): Free Stock Analysis
DRIL-QUIP INC (DRQ): Free Stock Analysis
ENERGY TRAN EQT (ETE): Free Stock Analysis
GRAN TIERRA EGY (GTE): Free Stock Analysis
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