Dril-Quip (NYSE: DRQ) and Natural Gas Services Group (NYSE:NGS) are both small-cap oils/energy companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitabiliy, risk, institutional ownership, earnings, dividends, analyst recommendations and valuation.

Institutional and Insider Ownership

88.0% of Natural Gas Services Group shares are owned by institutional investors. 0.9% of Dril-Quip shares are owned by insiders. Comparatively, 6.9% of Natural Gas Services Group shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Profitability

This table compares Dril-Quip and Natural Gas Services Group’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%
Natural Gas Services Group 6.06% 1.80% 1.43%

Analyst Ratings

This is a summary of current recommendations and price targets for Dril-Quip and Natural Gas Services Group, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Dril-Quip 0 6 1 0 2.14
Natural Gas Services Group 0 0 3 0 3.00

Dril-Quip currently has a consensus target price of $62.17, suggesting a potential upside of 28.58%. Natural Gas Services Group has a consensus target price of $34.33, suggesting a potential upside of 37.61%. Given Natural Gas Services Group’s stronger consensus rating and higher possible upside, analysts clearly believe Natural Gas Services Group is more favorable than Dril-Quip.

Risk and Volatility

Dril-Quip has a beta of 0.69, meaning that its share price is 31% less volatile than the S&P 500. Comparatively, Natural Gas Services Group has a beta of 1.24, meaning that its share price is 24% more volatile than the S&P 500.

Valuation & Earnings

This table compares Dril-Quip and Natural Gas Services Group’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Dril-Quip $491.40 million 3.72 $100.86 million $1.50 32.23
Natural Gas Services Group $68.98 million 4.68 $27.05 million $0.33 75.61

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

Summary

Natural Gas Services Group beats Dril-Quip on 8 of the 14 factors compared between the two stocks.

About Dril-Quip

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.

About Natural Gas Services Group

Natural Gas Services Group, Inc. is a provider of small to medium horsepower compression equipment to the natural gas industry. The Company focuses primarily on the non-conventional natural gas and oil production business in the United States, such as coal bed methane, gas shale, tight gas and oil shales. The Company manufactures, fabricates and rents natural gases compressors that enhance the production of natural gas wells and provides maintenance services for its natural gas compressors. In addition, it sells custom fabricated natural gas compressors to meet customer specifications dictated by well pressures, production characteristics and particular applications. It also manufactures and sells flare systems for oil and gas plant and production facilities. The Company’s operating units include Gas Compressor Rental, Engineered Equipment Sales, Service and Maintenance, and Corporate.

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