Comparing Dril-Quip (NYSE:DRQ) and Tesco Corporation (TESO)

Dril-Quip (NYSE: DRQ) and Tesco Corporation (NASDAQ:TESO) are both small-cap oils/energy companies, but which is the better business? We will contrast the two companies based on the strength of their risk, analyst recommendations, institutional ownership, valuation, profitabiliy, earnings and dividends.

Risk and Volatility

Dril-Quip has a beta of 0.65, indicating that its share price is 35% less volatile than the S&P 500. Comparatively, Tesco Corporation has a beta of 1.21, indicating that its share price is 21% more volatile than the S&P 500.

Valuation & Earnings

This table compares Dril-Quip and Tesco Corporation’s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	EBITDA	Earnings Per Share	Price/Earnings Ratio
Dril-Quip	$491.40 million	3.96	$100.86 million	$1.50	34.27
Tesco Corporation	$136.03 million	1.49	-$39.49 million	($1.67)	-2.60

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

Analyst Ratings

This is a summary of current recommendations for Dril-Quip and Tesco Corporation, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Dril-Quip	0	6	1	0	2.14
Tesco Corporation	1	2	3	0	2.33

Dril-Quip currently has a consensus target price of $62.17, suggesting a potential upside of 20.95%. Tesco Corporation has a consensus target price of $7.00, suggesting a potential upside of 60.92%. Given Tesco Corporation’s stronger consensus rating and higher probable upside, analysts plainly believe Tesco Corporation is more favorable than Dril-Quip.

Institutional and Insider Ownership

95.1% of Tesco Corporation shares are held by institutional investors. 0.9% of Dril-Quip shares are held by insiders. Comparatively, 1.7% of Tesco Corporation shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Dril-Quip and Tesco Corporation’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Dril-Quip	11.51%	3.65%	3.42%
Tesco Corporation	-55.00%	-18.65%	-16.87%

Summary

Dril-Quip beats Tesco Corporation on 7 of the 13 factors compared between the two stocks.

Dril-Quip Company Profile

Dril-Quip, Inc. (Dril-Quip) designs, manufactures, sells and services engineered drilling and production equipment. The Company’s operations are organized into three geographic segments: Western Hemisphere, including North and South America, headquartered in Houston, Texas; Eastern Hemisphere, including Europe and Africa, headquartered in Aberdeen, Scotland, and Asia-Pacific, including the Pacific Rim, Southeast Asia, Australia, India and the Middle East, headquartered in Singapore. Its equipment is suited for use in deepwater, harsh environments and service applications. Its principal products consist of subsea and surface wellheads, subsea and surface production trees, subsea control systems and manifolds, mudline hanger systems, specialty connectors and associated pipe, drilling and production riser systems, liner hangers, wellhead connectors and diverters. The Company has manufacturing facilities in approximately three of its headquarter locations, as well as in Macae, Brazil.

Tesco Corporation Company Profile

Tesco Corporation is a provider of technology-based solutions for drilling, servicing and completion of wells for the upstream energy industry. The Company’s operations consist of top drives and automated pipe handling equipment sales and rentals; aftermarket sales and services, and tubular services, including related products and accessories sales. Its segments include Products, Tubular Services, Research and Engineering, and Corporate and Other. The Products segment includes top drives and automated pipe handling equipment sales, rentals and aftermarket sales and services. The Tubular Services segment includes onshore and offshore tubular services and sales of related products and accessories. The Research and Engineering segment includes internal research, engineering, and development activities related to its products and tubular services. The Corporate and Other segment includes executive management and various global support and compliance functions.