An oil platform in the Gulf of MexicoHO
Validea's pick of the week provides a detailed report on a company that scores well in the stock-screening service's model portfolios. On Validea.ca, investors can analyze 1,000 Canadian stocks through 12 different guru-based models and get individual reports on each company. Globe Investor has a distribution agreement with Validea.ca. Try it.
Dril-Quip, Inc. manufactures highly engineered offshore drilling and production equipment for use in deep water, harsh environment and severe service applications. It has a $3-billion (U.S.) market cap.
The Warren Buffett-based strategy has strong interest, in part because DRQ has no long-term debt.
It trades for 13.6 times trailing 12-month EPS.
It has grown EPS at a 21-per-cent clip over the long term (using average of 3, 4, 5 yr EPS growth rates), part of why the Peter Lynch model has strong interest. It has a 0.65 P/E-to-growth ratio, which the Lynch model likes.
The company has an 11-per-cent earnings yield (EBIT/enterprise value).
It has a 7.0 current ratio, a sign of good liquidity, according to the Benjamin Graham-based approach.
The company has stellar 23-per-cent profit margin, 17-per-cent return on equity vs. the industry average of 2 per cent.
It has a 10-year return on retained earnings of 15 per cent, which the Buffett model likes.
The Martin Zweig-based strategy likes its strong, accelerating growth. EPS grew 33 per cent last quarter, up from an average of 31 per cent in the previous three quarters, up from 21 per cent long term.
John Reese is long DRQ.
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