January 18, 2024
Top 10 Stock Dril-Quip Sell Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: Dril-Quip – Top 10 Stock in Dow Jones U.S. Oil Equipment & Services Index
Dril-Quip is listed as a top 10 stock on January 18, 2024 in the market index D.J. US Oil Companies because of its high performance in at least one of the Obermatt investment strategies. Two consolidated Obermatt Ranks are above-average. While the company shows high growth, the stock price is high yet professional investor sentiment is low, which may be due to overly optimistic investor behavior, reflected in a low stock price value. Based on the Obermatt 360° View of 8 (8% performer), Obermatt issues an overall sell recommendation for Dril-Quip on January 18, 2024.
Snapshot: Obermatt Ranks
| Country | USA |
| Industry | Oil & Gas Equipment |
| Index | D.J. US Oil Companies |
| Size class | Medium |
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° View Dril-Quip Sell
| 360 METRICS | January 18, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 16 |
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| GROWTH | ||||||||
| GROWTH | 56 |
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| SAFETY | ||||||||
| SAFETY | 76 |
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| SENTIMENT | ||||||||
| SENTIMENT | 4 |
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| 360° VIEW | ||||||||
| 360° VIEW | 8 |
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ANALYSIS: With an Obermatt 360° View of 8 (better than 8% compared with alternatives), overall professional sentiment and financial characteristics for the stock Dril-Quip are critical, mostly below average. The 360° View is based on consolidating four consolidated indicators, with half of the metrics below and half above average for Dril-Quip. The consolidated Growth Rank has a good rank of 56, which means that the company experiences above-average growth momentum when looking at financial metrics such as revenue, profit, and invested capital growth as well as stock returns. This means that growth is higher than for 56% of competitors in the same industry. In addition, the consolidated Safety Rank has a safer rank of 76 which means that the company has a financing structure that is safer than 76% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. But the consolidated Value Rank has a less desirable rank of 16 which means that the share price of Dril-Quip is on the higher side compared with typical size in indicators such as revenues, profits, and invested capital. This means that the stock price is higher than for 84% of alternative stocks in the same industry. The consolidated Sentiment Rank also has a low rank of 4, which means that professional investors are more pessimistic about the stock than for 96% of alternative investment opportunities. ...read more
RECOMMENDATION: With a consolidated 360° View of 8, Dril-Quip is worse than 92% of all alternative stock investment opportunities based on the Obermatt Method. This means that Dril-Quip shares are on the riskier side for investors. As only half of the consolidated Obermatt Ranks exhibit excellent performance, the picture is ambiguous. Growth is above-average (Growth Rank of 56), and the company is safely financed (Safety Rank of 76). However, professional market sentiment is low(Sentiment Rank of 4). The negative market view on Dril-Quip may be due to the high stock price (low value). A growth company like this may get too expensive at one point in time. If too many investors are desperate to board the train, they may drive stock prices above reasonable levels. It is typical for growth companies to have low value ratings, because investors are willing to pay more for companies that outperform their competitors. So the question is, how much more do you pay for the stock of Dril-Quip compared with alternatives? You can use the following rule of thumb: The value rank shouldn’t be lower than one hundred minus the growth rank. For example, if the growth rank is at 75, and the value rank is at 5, you should tread carefully. If the value rank is at 40, it still might be a good value if the value rank is above 60. As market sentiment is low, you should be careful with paying more than market-average for this stock and conduct further research into the company’s future growth potential. ...read more
Sentiment Strategy: Professional Market Sentiment for Dril-Quip negative
ANALYSIS: With an Obermatt Sentiment Rank of 4 (better than 4% compared with alternatives), overall professional sentiment and engagement for the stock Dril-Quip is critical, mostly below average. The Sentiment Rank is based on consolidating four sentiment indicators, with three out of four metrics below average for Dril-Quip. Analyst Opinions are at a rank of 1 (worse than 99% of alternative investments), which means that currently, stock research analysts tend to warn against investing in the stock of the company. But they are changing their opinions! Analyst Opinions Change has a rank of 50, which means that stock research experts have found something to make them more positive about investing in the company. In other words, they are getting more optimistic of stock investments in Dril-Quip. But the Professional Investors rank is low at 6, which means that professional investors hold less stock in this company than in 94% of alternative investment opportunities. Pros tend to invest in other companies. Market Pulse is also low at a rank of 31, which means that the current professional news and professional social networks tend to be negative when discussing this company (more negative news than for 69% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 4 (less encouraging than 96% compared with investment alternatives), Dril-Quip has a reputation among professional investors that is far below that of its competitors. These are quite a few negative sentiment signals. One may want to trust the analysts that are changing their opinions. They may be early indications of better times, especially if the company is a smaller one. But If they are an extra large company, they should have more professional stockholders than are currently present. ...read more
Value Strategy: Dril-Quip Stock Price Value low
ANALYSIS: With an Obermatt Value Rank of 16 (worse than 84% compared with alternatives), Dril-Quip shares are significantly more expensive than comparable stocks. The Value Rank is based on consolidating four value indicators where three out of four are below average for Dril-Quip. Only the Price-to-Book Capital ratio (also referred to as market-to-book ratio) indicates good stock value with a Price-to-Book Rank of 82, which means that the stock price is lower compared with invested capital than for 82% of comparable investments. All other value indicators are below the market median. Price-to-Sales is 37 which means the stock price compared with what market professionals expect for future profits is higher than 63% of comparable companies, indicating a low value concerning Dril-Quip's revenue levels. The same is valid for the Price-to-Book Capital ratio (also referred to as market-to-book ratio) with a Price-to-Book Rank of 82 and for the dividend yields rank which is lower than for 99% of comparable companies, making the stock more expensive as regards to with the company's expected dividend payouts. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 16, is a sell recommendation based on Dril-Quip's stock price compared with the company's operational size and dividend yields. Why are market participants paying such a high price for Dril-Quip, where three out of four value indicators are below par? One reason could be that the company is well financed, indicated by the high book capital level, and has a promising future that is not yet visible in reported revenues and profits. That would also explain the low dividend yield because the company needs the cash to invest in its future. If investors can verify a picture in this sense, the stock may still be a good investment, even though current company-reported financials don't fully explain current stock prices. ...read more
Growth Strategy: Dril-Quip Growth Momentum good
ANALYSIS: With an Obermatt Growth Rank of 56 (better than 56% compared with alternatives), Dril-Quip shows an above-average growth dynamic in its industry. Investors also speak of positive momentum. The Growth Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Dril-Quip. Sales Growth has a rank of 87, which means that, currently, professionals expect the company to grow more than 87% of its competitors. Profit Growth with a rank of 75 is also above average. But Capital Growth has only a rank of 25, and Stock Returns with 27 are also below-average. Stock returns for Dril-Quip have recently been below 73% of alternative investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 56, is a buy recommendation for growth and momentum investors. Are investors forecasting troubles based on the lack of operating investment activity at the company? This could be one explanation as to why stock returns are low. But stock returns can also be the result of correcting an error in the past, in this case, an overly optimistic outlook on the future, which is now more realistic. The Value Ranks may confirm such a picture. The more important growth indicators are revenues and profits, which are both above average for Dril-Quip. This is a positive sign from the company's operational side and may give investors courage, despite the poor recent stock price performance. ...read more
Safety Strategy: Dril-Quip Debt Financing Safety very solid
| SAFETY METRICS | January 18, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 100 |
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| REFINANCING | ||||||||
| REFINANCING | 89 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 4 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 76 |
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ANALYSIS: With an Obermatt Safety Rank of 76 (better than 76% compared with alternatives) for 2024, the company Dril-Quip has safe financing practices, which means that their overall debt burden is low. This doesn't mean that the business of Dril-Quip is safe, it only means that the company is on the safer side regarding possible bankruptcy, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators where two out of three are above average for Dril-Quip.Leverage is at 100, meaning the company has a below-average debt-to-equity ratio. It has less debt than 100% of its competitors.Refinancing is at a rank of 89, meaning that the portion of the debt that is about to be refinanced is below average. It has less debt in the refinancing stage than 89% of its competitors. Liquidity is at 4, meaning that the company generates less profit to service its debt than 96% of its competitors. This indicates that the company is on the riskier side regarding debt service. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 76 (better than 76% compared with alternatives), Dril-Quip has a financing structure that is significantly safer than that of its competitors. Low leverage and low refinancing risk mean a safer financing situation. However, low liquidity means that current company cash flows are low in relation to the level of debt. This is a sign of caution in case it is expected for profits to remain low. ...read more
Combined financial peformance: Dril-Quip Below-Average Financial Performance
| COMBINED PERFORMANCE | January 18, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 16 |
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| GROWTH | ||||||||
| GROWTH | 56 |
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| SAFETY | ||||||||
| SAFETY | 4 |
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| COMBINED | ||||||||
| COMBINED | 41 |
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ANALYSIS: With an Obermatt Combined Rank of 41 (worse than 59% compared with investment alternatives), Dril-Quip (Oil & Gas Equipment, USA) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of Dril-Quip are low in value (priced high) with a consolidated Value Rank of 16 (worse than 84% of alternatives). But they show above-average growth (Growth Rank of 56) and are safely financed (Safety Rank of 76, which means below-average debt burdens). ...read more
RECOMMENDATION: A Combined Rank of 41, is a hold recommendation based on Dril-Quip's financial characteristics. Investors looking for growth and low financial risk may find this stock attractive. While the company Dril-Quip exhibits low value (Obermatt Value Rank of 16), which means that the stock price is rather high, it also demonstrates above-average growth (Obermatt Growth Rank of 56). This is a typical case, as high-growth companies are often expensive. Good financing practices (Obermatt Safety Rank of 76) are a double-edged sword: if the company continues growing, low debt limits shareholder returns. But if the company increases its debt, it will also increase risk. In other words, this is an investment on the safer side, despite the above-average price (low value). ...read more
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