Critical Analysis: Drilling Tools International (NASDAQ:DTI) vs. Flotek Industries (NYSE:FTK)

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

Analyst Recommendations

This is a breakdown of current recommendations for Flotek Industries and Drilling Tools International, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Flotek Industries	0	1	3	0	2.75
Drilling Tools International	2	0	0	0	1.00

Flotek Industries currently has a consensus price target of $22.50, suggesting a potential downside of 6.38%. Given Flotek Industries’ stronger consensus rating and higher probable upside, analysts plainly believe Flotek Industries is more favorable than Drilling Tools International.

Institutional & Insider Ownership

10.9% of Flotek Industries shares are held by institutional investors. Comparatively, 2.8% of Drilling Tools International shares are held by institutional investors. 2.4% of Flotek Industries shares are held by company insiders. Comparatively, 17.1% of Drilling Tools International 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.

Valuation and Earnings

This table compares Flotek Industries and Drilling Tools International”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Flotek Industries	$237.26 million	3.66	$30.53 million	$0.78	30.81
Drilling Tools International	$159.63 million	0.56	-$3.76 million	($0.11)	-23.00

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Flotek Industries	11.83%	20.70%	10.23%
Drilling Tools International	-2.35%	0.45%	0.24%

Risk and Volatility

Flotek Industries has a beta of 1.43, indicating that its stock price is 43% more volatile than the S&P 500. Comparatively, Drilling Tools International has a beta of -0.66, indicating that its stock price is 166% less volatile than the S&P 500.

Summary

Flotek Industries beats Drilling Tools International on 13 of the 14 factors compared between the two stocks.

About Flotek Industries

Flotek Industries, Inc. operates as a technology-driven green chemistry and data company that serves customers across industrial and commercial markets in the United States, the United Arab Emirates, and internationally. It operates through two segments: Chemistry Technologies (CT) and Data Analytics (DA). The CT segment designs, develops, manufactures, packages, distributes, delivers, and markets green specialty chemicals that enhance the profitability of hydrocarbon producers, as well as green specialty chemistries, and logistics and technology services. This segment primarily serves integrated oil and gas, oilfield services, independent oil and gas, national and state-owned oil, geothermal energy, solar energy, and alternative energy companies. The DA segment designs, develops, produces, sells, and supports equipment and services that create and provide valuable information on the composition and properties of energy customers' hydrocarbon fluids. It sells its products directly through a mix of in-house sales professionals, as well as contractual agency agreements. Flotek Industries, Inc. was incorporated in 1985 and is headquartered in Houston, Texas.

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.