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Relative valuation derived from Industrials sector median benchmarks. Model weights: EV/EBITDA (40%), P/B (35%), P/S (25%). Multiples adjusted for extreme outliers and non-recurring volatility.
Auditing capital efficiency...
Quality Profile Audit
Score: 50GRADE C+
Composite assessment of profitability, capital efficiency, and financial strength. Top-tier entities demonstrate sustainable cash flow generation.
Return on Equity
Profit generated per dollar of shareholder equity
-3.4%
Sector: 8.9%
Dividend Analysis audit
No Dividend
This company does not currently pay a dividend.
Analyst Projections
Analyst Consensus
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Based on our 6-factor quantitative model, Drilling Tools International Corp (DTI) receives a "Hold" rating with a composite score of 48.5/100, ranked #154 out of 4446 stocks. Key factor scores: Quality 50/100, Value 47/100, Momentum 64/100. This is quantitative analysis only — not investment advice.
Drilling Tools International Corp (DTI) Stock Analysis — April 2026 Rating, Price, and Forecast
Company Overview — What Does Drilling Tools International Corp Do?
Drilling Tools International Corp. operates as a oilfield services company. It manufactures and rents downhole drilling tools used in horizontal and directional drilling of oil and natural gas wells. It operates in North America, Europe, and the Middle East. The company was incorporated in 1984 and is headquartered in Houston, Texas. Drilling Tools International Corp (DTI) is classified as a micro-cap stock in the Industrials sector, specifically within the Machinery industry. The company is led by CEO Wayne Prejean. With a market capitalization of $151M, DTI is one of the notable companies in the Industrials sector.
Drilling Tools International Corp (DTI) Stock Rating — Hold (April 2026)
As of April 2026, Drilling Tools International Corp receives a Hold rating with a composite score of 48.5/100 and 3 out of 5 stars from the Blank Capital Research quantitative model.DTI ranks #154 out of 4,446 stocks in our coverage universe. Within the Industrials sector, Drilling Tools International Corp ranks #26 of 752 stocks, placing it in the top 10% of its Industrials peers. The rating is generated by a multi-factor model that weighs quality (30%), momentum (25%), value (15%), investment (10%), stability (10%), and short interest (10%).
DTI Stock Price and 52-Week Range
Drilling Tools International Corp (DTI) currently trades at $3.31. The stock gained $0.10 (3.1%) in the most recent trading session. The 52-week high for DTI is $4.38, which means the stock is currently trading -24.5% from its annual peak. The 52-week low is $1.43, putting the stock 131.5% above its annual trough. Recent trading volume was 575K shares, suggesting relatively thin trading activity.
Is DTI Overvalued or Undervalued? — Valuation Analysis
Drilling Tools International Corp (DTI) carries a value factor score of 47/100 in the Blank Capital model, indicating fair valuation relative to historical norms. The price-to-book ratio stands at 1.02x, versus the sector average of 2.23x. The price-to-sales ratio is 0.77x, compared to 0.50x for the average Industrials stock. On an enterprise value basis, DTI trades at 5.34x EV/EBITDA, versus 5.70x for the sector.
Overall, DTI's valuation appears roughly in line with sector benchmarks, suggesting the market is pricing the stock fairly given its current fundamentals and growth trajectory. Neither deep value nor significantly overpriced, the stock occupies a middle ground on valuation.
Drilling Tools International Corp Profitability — ROE, Margins, and Quality Score
Drilling Tools International Corp (DTI) earns a quality factor score of 50/100, indicating solid business quality with consistent operational execution. The return on equity (ROE) is -3.4%, compared to the Industrials sector average of 8.9%, which is below typical expectations for high-quality companies. Return on assets (ROA) comes in at -1.8% versus the sector average of 3.3%.
On a margin basis, Drilling Tools International Corp reports gross margins of 74.0%, compared to 35.8% for the sector. The operating margin is 3.2% (sector: 6.2%). Net profit margin stands at -2.5%, versus 3.9% for the average Industrials stock. Revenue growth is running at 3.4% on a trailing basis, compared to 6.4% for the sector. The overall profitability profile is adequate, though there may be room for margin expansion.
DTI Debt, Balance Sheet, and Financial Health
Drilling Tools International Corp has a debt-to-equity ratio of 37.0%, compared to the Industrials sector average of 70.0%. The low leverage indicates a conservative balance sheet with significant financial flexibility. The current ratio is 2.11x, indicating strong short-term liquidity. Total debt on the balance sheet is $46M. Cash and equivalents stand at $4M.
DTI has a beta of 1.23, meaning it is more volatile than the broader market — a $10,000 investment in DTI would be expected to move 22.8% more than the S&P 500 on any given day. The stability factor score for Drilling Tools International Corp is 26/100, suggesting elevated price swings that may be unsuitable for conservative portfolios.
Drilling Tools International Corp Revenue and Earnings History — Quarterly Trend
In TTM 2026, Drilling Tools International Corp reported revenue of $161M and earnings per share (EPS) of $-0.11. Net income for the quarter was $-4M. Operating income came in at $5M.
In FY 2025, Drilling Tools International Corp reported revenue of $160M and earnings per share (EPS) of $-0.11. Net income for the quarter was $-4M. Revenue grew 3.4% year-over-year compared to FY 2024. Operating income came in at $-3M.
In Q3 2025, Drilling Tools International Corp reported revenue of $39M and earnings per share (EPS) of $-0.03. Net income for the quarter was $-904,000. Revenue grew -3.2% year-over-year compared to Q3 2024. Operating income came in at $-467,000.
In Q2 2025, Drilling Tools International Corp reported revenue of $39M and earnings per share (EPS) of $-0.07. Net income for the quarter was $-2M. Revenue grew 5.0% year-over-year compared to Q2 2024. Operating income came in at $-2M.
Over the past 8 quarters, Drilling Tools International Corp has demonstrated a growth trajectory, with revenue expanding from $38M to $161M. Investors analyzing DTI stock should weigh these quarterly trends alongside the valuation and quality metrics discussed above.
DTI Dividend Yield and Income Analysis
Drilling Tools International Corp (DTI) does not currently pay a dividend. This is common among smaller companies in the Machinery industry that prefer to reinvest cash flows into business expansion rather than returning capital to shareholders. Income-focused investors looking for Industrials dividend stocks may want to explore other Industrials stocks or use the stock screener to filter by dividend yield.
DTI Momentum and Technical Analysis Profile
Drilling Tools International Corp (DTI) has a momentum factor score of 64/100, reflecting neutral trend characteristics. The stock is neither significantly outperforming nor underperforming the broader market on a momentum basis. The investment factor score is 32/100, which measures capital allocation efficiency and asset growth patterns. The short interest score of 48/100 reflects moderate short selling activity.
DTI vs Competitors — Industrials Sector Ranking and Peer Comparison
Comparing DTI against the S&P 500 benchmark is also instructive for understanding relative performance. Investors can view the full DTI vs S&P 500 (SPY) comparison to assess how Drilling Tools International Corp stacks up against the broader market across all factor dimensions.
DTI Next Earnings Date
No upcoming earnings date has been announced for Drilling Tools International Corp (DTI) at this time. Check the earnings calendar for the latest scheduling updates across all stocks in our coverage universe.
Should You Buy DTI? — Investment Thesis Summary
Drilling Tools International Corp presents a balanced picture with arguments on both sides. Price momentum is positive at 64/100, suggesting the trend favors buyers. High volatility (stability score 26/100) increases portfolio risk.
In summary, Drilling Tools International Corp (DTI) earns a Hold rating with a composite score of 48.5/100 as of April 2026. The rating is derived from the Blank Capital Research methodology, which combines six factor dimensions into a single quantitative ranking. Investors should consider these quantitative signals alongside their own fundamental research, risk tolerance, and investment time horizon before making buy or sell decisions on DTI stock.
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Institutional Research Dossier
Drilling Tools International Corp (DTI) Deep Dive Analysis
Published on March 24, 2026
Action RatingHold
Sections
Executive Summary
Drilling Tools International Corp (DTI) receives a Hold rating, primarily driven by its inconsistent profitability and a lack of free cash flow data, despite showing some positive signs in revenue growth and gross margins. While the company's EV/EBITDA multiple appears attractive compared to the sector, the negative net income and volatile operating margins raise concerns about the sustainability of its performance and warrant a cautious approach.
The company's reliance on the cyclical oil and gas industry introduces significant volatility, and its relatively small market capitalization makes it susceptible to price swings. Investors should closely monitor DTI's ability to achieve consistent profitability and generate positive free cash flow before considering a more bullish stance.
Business Strategy & Overview
Drilling Tools International Corp. (DTI) operates within the oilfield services sector, focusing on the manufacturing and rental of downhole drilling tools. These tools are essential for horizontal and directional drilling, which are common techniques in the extraction of oil and natural gas. DTI's revenue model is based on both the sale and, more significantly, the rental of these specialized tools, providing a recurring revenue stream tied to drilling activity. The company's geographic footprint spans North America, Europe, and the Middle East, exposing it to varying regional dynamics within the energy sector.
DTI's strategic positioning hinges on providing specialized drilling solutions that cater to the demands of complex drilling operations. The company likely competes with larger, more diversified oilfield service companies, as well as smaller, niche players. Its success depends on maintaining a technologically relevant and well-maintained tool inventory, coupled with effective customer service and geographic reach. The company's ability to adapt to evolving drilling techniques and customer needs is crucial for sustaining its competitive edge.
The oil and gas industry is inherently cyclical, with demand and pricing heavily influenced by global economic conditions, geopolitical events, and technological advancements. DTI's performance is therefore directly correlated with the level of drilling activity, which can fluctuate significantly. The shift towards renewable energy sources also presents a long-term challenge, potentially impacting the demand for oil and gas and, consequently, the need for DTI's services. However, the continued reliance on fossil fuels in the near to medium term provides ongoing opportunities for DTI.
Given the absence of specific product pipeline information, it is reasonable to assume that DTI invests in research and development to enhance its existing tool offerings and potentially develop new solutions. The company's ability to innovate and offer differentiated products could be a key factor in gaining market share and maintaining profitability. Furthermore, strategic partnerships or acquisitions could expand DTI's product portfolio and geographic reach.
Execution Benchmarks audit
Revenue Growth
YOY expansion rate
3.4%
Sector: 6.4%
-46% VS SCTR
Economic Moat Analysis
Drilling Tools International's economic moat appears to be narrow. While the company possesses some characteristics that could contribute to a competitive advantage, they are not strong enough to create a wide moat. The primary factors influencing this assessment are the nature of the oilfield services industry and DTI's specific position within it.
One potential source of a narrow moat could be switching costs. If DTI's tools are highly specialized and integrated into customers' drilling operations, switching to a competitor's tools could involve costs related to retraining, compatibility issues, and potential downtime. However, the extent of these switching costs is likely limited, as customers may have multiple qualified suppliers and standardized equipment interfaces.
Another potential moat source is intangible assets, specifically related to proprietary designs or patents on its drilling tools. If DTI holds patents on unique and effective tool designs, it could enjoy a period of exclusivity and higher pricing power. However, the oilfield services industry is characterized by rapid innovation and imitation, which can erode the value of patents over time. Without concrete data on DTI's patent portfolio and its competitive impact, it is difficult to assess the strength of this moat source.
The absence of strong network effects and cost advantages further limits DTI's moat. Network effects are unlikely to be significant in this industry, as the value of DTI's tools does not increase as more customers use them. While DTI's gross margin is higher than the sector average, this could be due to product mix or pricing strategies rather than a sustainable cost advantage. Without a clear cost advantage, DTI is vulnerable to price competition from other players in the market.
Efficient scale, where a company can efficiently serve a limited market size, is also unlikely to be a significant moat source for DTI. The oilfield services market is relatively large and fragmented, with numerous competitors operating at various scales. DTI's relatively small market capitalization suggests that it does not possess a dominant market share or significant economies of scale.
In conclusion, while DTI may have some limited competitive advantages related to switching costs or intangible assets, these are not strong enough to create a wide moat. The company operates in a competitive industry with cyclical demand and limited barriers to entry, making it difficult to sustain above-average profitability over the long term.
Financial Health & Profitability
Drilling Tools International's financial health presents a mixed picture. The company's revenue has shown modest growth, with FY2025 revenue at $159.63M compared to $154.45M in FY2024 and $152.03M in FY2023. This indicates a positive trend, but the growth rate is relatively low, especially compared to the sector average of 6.6%. The gross margin is a bright spot, consistently high at 74.0% in the TTM period and 75.1% in FY2024, significantly exceeding the sector average of 35.8%. This suggests that DTI has some pricing power or cost advantages in its specific product offerings.
However, profitability is a concern. The company reported a net loss of $3.76M in FY2025, contrasting sharply with net income of $3.01M in FY2024 and $14.75M in FY2023. This decline in profitability is reflected in the negative net margin of -2.5% compared to the sector average of 3.7%. The operating margin also shows volatility, with a negative margin of -1.8% in FY2025 compared to 8.7% in FY2024 and 18.4% in FY2023. The quarterly financial history reveals inconsistent performance, with periods of positive and negative net income and operating margins.
The company's balance sheet shows a moderate level of debt, with total debt of $45.82M and total cash of $4.37M. The debt-to-equity ratio is 37.00, which is lower than the sector average of 70.00, suggesting that DTI is less leveraged than its peers. The current ratio of 2.11 indicates that the company has sufficient liquid assets to cover its short-term liabilities. However, the lack of free cash flow data makes it difficult to assess the company's ability to generate cash from its operations and service its debt.
The ROE of -3.4% is significantly lower than the sector average of 9.2%, reflecting the company's poor profitability. The EBITDA of $24.43M provides some comfort, but the negative net income raises questions about the sustainability of this level of EBITDA. The company's financial health is further complicated by the cyclical nature of the oil and gas industry, which can lead to significant fluctuations in revenue and profitability.
In summary, DTI's financial health is characterized by strong gross margins but inconsistent profitability and a lack of free cash flow data. While the company's debt levels appear manageable, the negative net income and volatile operating margins warrant caution. Investors should closely monitor DTI's ability to improve its profitability and generate positive free cash flow before considering a more bullish stance.
Valuation Assessment
Assessing Drilling Tools International's valuation is challenging due to its recent negative net income. The company's P/E ratio is not meaningful (N/A) because of the negative earnings, making it impossible to use this metric for comparison. However, the EV/EBITDA multiple of 1.8x appears significantly lower than the sector average of 5.7x, suggesting that DTI may be undervalued based on its enterprise value relative to its earnings before interest, taxes, depreciation, and amortization.
However, relying solely on the EV/EBITDA multiple can be misleading, especially when a company's profitability is inconsistent. The low EV/EBITDA could be a reflection of the market's concerns about DTI's ability to sustain its EBITDA levels and generate positive net income in the future. The negative net income and volatile operating margins raise questions about the quality of DTI's earnings and the sustainability of its current performance.
Without free cash flow data, it is difficult to assess DTI's valuation using a discounted cash flow (DCF) analysis. A DCF analysis would provide a more comprehensive view of the company's intrinsic value by considering its future cash flow generation potential. However, in the absence of this data, investors must rely on other valuation metrics and qualitative factors to assess DTI's worth.
Compared to its historical performance, DTI's current valuation is difficult to assess due to the lack of consistent profitability. In FY2023, when the company reported a net income of $14.75M, its valuation metrics would have been significantly different. The recent decline in profitability has likely impacted the market's perception of DTI's value and resulted in a lower valuation.
Considering the company's modest revenue growth, inconsistent profitability, and the cyclical nature of the oil and gas industry, DTI's current valuation appears to be fair. While the low EV/EBITDA multiple may suggest undervaluation, the negative net income and lack of free cash flow data warrant caution. Investors should closely monitor DTI's ability to improve its profitability and generate positive free cash flow before considering a more bullish stance. A higher valuation would be justified if the company can demonstrate consistent earnings growth and strong cash flow generation.
Risk & Uncertainty
Drilling Tools International faces several specific risks that could negatively impact its business and financial performance. The most significant risk is its reliance on the cyclical oil and gas industry. Fluctuations in oil and gas prices, drilling activity, and exploration budgets can directly affect the demand for DTI's drilling tools and services. A prolonged downturn in the energy sector could lead to reduced revenue, lower profitability, and potential financial distress.
Competition is another significant risk. The oilfield services industry is highly competitive, with numerous players offering similar products and services. DTI competes with larger, more diversified companies that have greater financial resources and broader geographic reach. Intense competition could lead to price wars, reduced margins, and loss of market share. The company's ability to differentiate its products and services and maintain competitive pricing is crucial for mitigating this risk.
Customer concentration is a potential risk, although the extent of this risk is unknown without specific data on DTI's customer base. If a significant portion of DTI's revenue is derived from a small number of customers, the loss of one or more of these customers could have a material adverse effect on its financial performance. Diversifying its customer base and building strong relationships with key clients is important for reducing this risk.
Leverage poses a risk, as DTI has total debt of $45.82M. While the debt-to-equity ratio is lower than the sector average, the company's ability to service its debt depends on its ability to generate sufficient cash flow. A decline in revenue or profitability could make it difficult for DTI to meet its debt obligations, potentially leading to financial distress. Prudent debt management and maintaining adequate liquidity are essential for mitigating this risk.
Regulatory changes in the oil and gas industry could also pose a risk. Environmental regulations, drilling restrictions, and changes in tax policies could impact the demand for oil and gas and, consequently, the need for DTI's services. The company's ability to adapt to evolving regulatory requirements and maintain compliance is crucial for sustaining its operations.
Bulls Say / Bears Say
The Bull Case
BULL VIEWDTI's superior gross margins compared to the sector indicate a strong competitive advantage and pricing power in its niche market.
BULL VIEWThe low EV/EBITDA multiple suggests that DTI is undervalued, offering significant upside potential as the oil and gas industry recovers.
BULL VIEWDTI's lower debt-to-equity ratio compared to peers provides financial flexibility and reduces the risk of financial distress.
The Bear Case
BEAR VIEWDTI's recent net losses and volatile operating margins raise serious concerns about its ability to achieve sustainable profitability.
BEAR VIEWThe lack of free cash flow data makes it difficult to assess DTI's true financial health and its ability to generate cash from operations.
BEAR VIEWDTI's reliance on the cyclical oil and gas industry exposes it to significant volatility and uncertainty, making it a risky investment.
About the Author
Marques Blank
Founder & Chief Investment Officer, Blank Capital
Marques brings 15 years of institutional finance and investing experience, having overseen financial planning for a $1.6B defense business unit. He developed the proprietary 6-factor quantitative model used to score DTI and 4,400+ other equities.
Drilling Tools International Corp exhibits a 53% valuation discount relative to institutional benchmarks. This represents a constructive entry window based on current multiples.
Return on Assets
Efficiency of asset utilization
-1.8%
Sector: 3.3%
Gross Margin
Pricing power and cost efficiency
74.0%
Sector: 35.8%
Operating Margin
Core business profitability
3.2%
Sector: 6.2%
Net Margin
Bottom-line profitability
-2.5%
Sector: 3.9%
Factor Methodology
The Quality factor evaluates the persistence and magnitude of cash flows. Companies with scores >70 exhibit superior competitive moats and financial resilience through economic cycles.
