Critical Review: Dril-Quip (DRQ) & Forum Energy Technologies (FET)

Dril-Quip (NYSE: DRQ) and Forum Energy Technologies (NYSE:FET) are both small-cap oils/energy companies, but which is the better business? We will compare the two companies based on the strength of their analyst recommendations, institutional ownership, profitability, valuation, risk, dividends and earnings.

Risk and Volatility

Dril-Quip has a beta of 0.8, indicating that its stock price is 20% less volatile than the S&P 500. Comparatively, Forum Energy Technologies has a beta of 1.9, indicating that its stock price is 90% more volatile than the S&P 500.

Valuation and Earnings

This table compares Dril-Quip and Forum Energy Technologies’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Dril-Quip $455.47 million 4.30 -$100.63 million $0.26 197.50
Forum Energy Technologies $818.60 million 1.62 -$59.40 million ($0.38) -31.97

Forum Energy Technologies has higher revenue and earnings than Dril-Quip. Forum Energy Technologies is trading at a lower price-to-earnings ratio than Dril-Quip, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

95.7% of Forum Energy Technologies shares are owned by institutional investors. 1.1% of Dril-Quip shares are owned by company insiders. Comparatively, 30.0% of Forum Energy Technologies shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares Dril-Quip and Forum Energy Technologies’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Dril-Quip -24.83% -0.26% -0.25%
Forum Energy Technologies -1.48% -2.40% -1.56%

Analyst Recommendations

This is a breakdown of recent recommendations for Dril-Quip and Forum Energy Technologies, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Dril-Quip 0 7 2 0 2.22
Forum Energy Technologies 0 10 2 0 2.17

Dril-Quip presently has a consensus target price of $47.14, indicating a potential downside of 8.19%. Forum Energy Technologies has a consensus target price of $14.30, indicating a potential upside of 17.70%. Given Forum Energy Technologies’ higher probable upside, analysts clearly believe Forum Energy Technologies is more favorable than Dril-Quip.

Summary

Forum Energy Technologies beats Dril-Quip on 7 of the 13 factors compared between the two stocks.

Dril-Quip Company Profile

Dril-Quip, Inc., together with its subsidiaries, designs, manufactures, sells, and services onshore and offshore drilling and production equipment for use in deepwater, harsh environment, and severe service applications worldwide. It operates through three segments: Western Hemisphere, Eastern Hemisphere, and Asia-Pacific. The company's principal products include subsea and surface wellheads, subsea and surface production trees, subsea control systems and manifolds, mudline hanger systems, specialty connectors and associated pipes, drilling and production riser systems, liner hangers, wellhead connectors, diverters, and safety valves, as well as consumable downhole products. It also provides technical advisory services, and rework and reconditioning services, as well as rental and purchase of running tools for use in the installation and retrieval of the its products. The company's products are used to explore for oil and gas from offshore drilling rigs, such as floating rigs and jack-up rigs; and for drilling and production of oil and gas wells on offshore platforms, tension leg platforms, and Spars, as well as moored vessels, such as floating production, storage, and offloading monohull moored vessels. It sells its products directly through its sales personnel, independent sales agents, and representatives to integrated, independent, and foreign national oil and gas companies, as well as drilling contractors, and engineering and construction companies. Dril-Quip, Inc. was founded in 1981 and is headquartered in Houston, Texas.

Forum Energy Technologies Company Profile

Forum Energy Technologies, Inc. designs, manufactures, and distributes products to the oil and natural gas industry in the United States and internationally. The company operates in three segments: Drilling & Subsea, Completions, and Production & Infrastructure. The Drilling & Subsea segment designs and manufactures products, and provides related services to the drilling, energy subsea construction and service markets, and other markets, such as alternative energy, defense, and communications. This segment offers drilling technologies consisting of capital equipment and a line of products consumed in the drilling; and subsea technologies, including robotic vehicles and other capital equipment, specialty components and tools, complementary subsea technical services and rental items, and products used in pipeline infrastructure. The Completions segment provides products and related services to the well construction, completion, stimulation, and intervention markets. This segment offers downhole technologies comprising cementing and casing tools, completion products, and a range of downhole cable protection solutions; and stimulation and intervention technologies, including pumps and well stimulation consumable products, and related recertification and refurbishment services. The Production & Infrastructure segment designs, manufactures, and supplies products, and provides related equipment and services to the production and infrastructure markets. This segment supplies production equipment, including well site production and process equipment; and a range of industrial and process valves. The company was formerly known as Forum Oilfield Technologies, Inc. and changed its name to Forum Energy Technologies, Inc. in August 2010. Forum Energy Technologies, Inc. was incorporated in 2005 and is headquartered in Houston, Texas.

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