Dril-Quip Inc. is a manufacturer of offshore drilling and production equipment often used for deep water, harsh environments and severe service applications. Product offerings from the company consist of subsea and surface wellheads, subsea and surface production trees, subsea control systems and manifolds, and a host of other hanger and connector products. Additionally, Dril-Quip was pitched by one of the panelists in the January 2022’s Barron’s newspaper. This week, I fundamentally analyze Dril-Quip’s stock. I review Dril-Quip’s operating segments, look at its key ratios, and derive the intrinsic value using Discounted Cash Flow (DCF) analysis. Since this is a long video, please feel free to use the time stamps in the video if you only wish to watch certain topics.
I review various key ratios such as Revenue, Net Income, Shares outstanding, Dividends, Payout Ratio, Free Cash Flows (FCF), Financial Leverage, Current Ratio, Debt to Equity Ratio, Return on Equity (ROE), Days Sales Outstanding (DSO), Days Inventory, Payable Period, Cash Conversion Cycle, Inventory Turnover, etc.
After taking into account 10-year average free cash flow of $66 million figure, a 5% growth rate of FCF (growth for the next 10 years), 10% discount rate, 2.125% long term growth rate (growth from 10 year mark in the future to perpetuity), 35 million shares outstanding, and $0 million of long term debt, the DCF analysis yields us an intrinsic value of $29.39 per share.
0:26 Business Overview
5:26 Key Ratios Analysis
16:02 Discounted Cash Flow Analysis / Intrinsic Value
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Dril-Quip’s Website: here.
Morningstar Key Ratios Link: here.
Useful Resources here.
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