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

Profitability

This table compares Dril-Quip and Tenaris’ 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%
Tenaris 5.55% 1.23% 1.01%

Insider & Institutional Ownership

18.7% of Tenaris shares are owned by institutional investors. 0.9% of Dril-Quip shares are owned by company insiders. Comparatively, 0.2% of Tenaris shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Analyst Ratings

This is a breakdown of recent recommendations for Dril-Quip and Tenaris, as provided by MarketBeat.

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

Dril-Quip presently has a consensus target price of $62.17, indicating a potential upside of 21.18%. Tenaris has a consensus target price of $36.06, indicating a potential upside of 11.55%. Given Dril-Quip’s higher possible upside, equities research analysts clearly believe Dril-Quip is more favorable than Tenaris.

Valuation and Earnings

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

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Dril-Quip $491.40 million 3.95 $100.86 million $1.50 34.20
Tenaris $4.24 billion 4.50 $678.18 million $0.42 76.98

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

Volatility & Risk

Dril-Quip has a beta of 0.65, suggesting that its stock price is 35% less volatile than the S&P 500. Comparatively, Tenaris has a beta of 0.63, suggesting that its stock price is 37% less volatile than the S&P 500.

Dividends

Tenaris pays an annual dividend of $1.12 per share and has a dividend yield of 3.5%. Dril-Quip does not pay a dividend. Tenaris pays out 266.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

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.

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.

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