Critical Review: ProPetro (NYSE:PUMP) versus Drilling Tools International (NASDAQ:DTI)

Drilling Tools International (NASDAQ:DTI) and ProPetro (NYSE:PUMP) are both small-cap energy companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, dividends, earnings, analyst recommendations, profitability, institutional ownership and risk.

Institutional & Insider Ownership

2.8% of Drilling Tools International shares are held by institutional investors. Comparatively, 84.7% of ProPetro shares are held by institutional investors. 14.7% of Drilling Tools International shares are held by company insiders. Comparatively, 1.6% of ProPetro shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Volatility and Risk

Drilling Tools International has a beta of -0.38, indicating that its stock price is 138% less volatile than the S&P 500. Comparatively, ProPetro has a beta of 0.75, indicating that its stock price is 25% less volatile than the S&P 500.

Valuation and Earnings

This table compares Drilling Tools International and ProPetro”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Drilling Tools International	$154.45 million	0.64	$3.01 million	($0.19)	-14.79
ProPetro	$1.44 billion	0.68	-$137.86 million	($0.17)	-55.38

Drilling Tools International has higher earnings, but lower revenue than ProPetro. ProPetro is trading at a lower price-to-earnings ratio than Drilling Tools International, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent ratings and price targets for Drilling Tools International and ProPetro, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Drilling Tools International	1	0	0	1	2.50
ProPetro	1	4	4	0	2.33

ProPetro has a consensus target price of $12.50, suggesting a potential upside of 32.77%. Given ProPetro’s higher probable upside, analysts clearly believe ProPetro is more favorable than Drilling Tools International.

Profitability

This table compares Drilling Tools International and ProPetro’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Drilling Tools International	-3.93%	1.12%	0.60%
ProPetro	-1.31%	-0.06%	-0.04%

Summary

ProPetro beats Drilling Tools International on 8 of the 15 factors compared between the two stocks.

About Drilling Tools International

Drilling Tools International Corporation provides oilfield equipment and services to oil and natural gas sectors in North America, Europe, and the Middle East. It offers downhole tool rentals, machining, and inspection services to support the global drilling and wellbore construction industry. The company also provides products are bottom hole assembly components, such as stabilizers, subs, non-magnetic and steel drill collars, hole openers, and roller reamers, as well as drill pipe and drill pipe accessories; ancillary equipment and handling tools to support its rental platform, including float valves, ring gauges, tool baskets, lift bail, lift subs, mud magnets, elevators, bracket and bail assemblies, slips, tongs, stabbing guides and safety clamps; and blowout preventers, and pressure control accessory equipment. In addition, it offers tool rental services, which consists of rental, inspection, machining, and repair services; rents downhole drilling tools used in horizontal and directional drilling of oil and natural gas; rents kellys, pip joints, work strings; maintains a fleet of rental equipment consisting of drill collars, stabilizers, crossover subs, wellbore conditioning tools, drill pipe, hevi-wate drill pipe, and tubing; rents surface control equipment, such as blowout preventers and handling tools; and provides downhole products for producing wells. Drilling Tools International Corporation is headquartered in Houston, Texas.

About ProPetro

ProPetro Holding Corp. operates as an integrated oilfield services company. The company provides hydraulic fracturing, wireline, cementing, and other complementary oilfield completion services to upstream oil and gas companies in the Permian Basin. ProPetro Holding Corp. was founded in 2007 and is headquartered in Midland, Texas.