Head-To-Head Review: Tenaris (TS) & Dril-Quip (DRQ)

Tenaris (NYSE: TS) and Dril-Quip (NYSE:DRQ) are both industrial products companies, but which is the superior business? We will contrast the two companies based on the strength of their earnings, risk, analyst recommendations, dividends, institutional ownership, valuation and profitability.

Volatility & Risk

Tenaris has a beta of 0.63, indicating that its share price is 37% less volatile than the S&P 500. Comparatively, Dril-Quip has a beta of 0.63, indicating that its share price is 37% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Tenaris	7.35%	2.00%	1.63%
Dril-Quip	4.28%	2.12%	1.99%

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	EBITDA	Earnings Per Share	Price/Earnings Ratio
Tenaris	$4.43 billion	3.63	$774.70 million	$0.57	47.77
Dril-Quip	$476.88 million	3.15	$59.69 million	$0.54	73.52

Tenaris has higher revenue and earnings than Dril-Quip. Tenaris 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 breakdown of recent recommendations for Tenaris and Dril-Quip, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Tenaris	1	3	7	0	2.55
Dril-Quip	0	6	1	0	2.14

Tenaris currently has a consensus target price of $35.17, indicating a potential upside of 29.15%. Dril-Quip has a consensus target price of $53.67, indicating a potential upside of 35.18%. Given Dril-Quip’s higher possible upside, analysts plainly believe Dril-Quip is more favorable than Tenaris.

Institutional and Insider Ownership

17.6% of Tenaris shares are held by institutional investors. 0.2% of Tenaris shares are held by insiders. Comparatively, 0.9% of Dril-Quip shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Dividends

Tenaris pays an annual dividend of $1.12 per share and has a dividend yield of 4.1%. Dril-Quip does not pay a dividend. Tenaris pays out 196.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Summary

Tenaris beats Dril-Quip on 9 of the 15 factors compared between the two stocks.

Tenaris Company Profile

Tenaris S.A. is a holding company, which is a steel producer with production facilities in Mexico, Argentina, Colombia, United States and Guatemala. The Company supplies round steel bars and flat steel products for its pipes business. It operates through Tubes business segment. The Tubes segment includes the production and sale of both seamless and welded steel tubular products, and related services primarily for the oil and gas industry, principally oil country tubular goods (OCTG) used in drilling operations, and for other industrial applications with production processes that include in the transformation of steel into tubular products. It operates in geographical areas, such as North America, South America, Europe, Middle East and Africa, and Asia Pacific. Its products and services include OCTG, Premium Connections, Rig Direct, Offshore Line Pipe, Onshore Line Pipe, Hydrocarbon Processing, Power Generation, Sucker Rods, Coiled Tubing, Industrial and Mechanical, and Automotive.

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.