GulfMark Offshore Unduly Punished

With oil at basically record prices, GulfMark has been a key beneficiary. The company's customers employ its vessels for services supporting construction, position and ongoing maintenance of offshore oil and natural gas drilling rigs and platforms.

Lost in the massive amount of Federal Reserve data last Wednesday was the fact that GulfMark reported earnings of $1.40 a share vs. analysts' estimates of $1.10. This 27% earnings beat is remarkable considering the fact that the first quarter of each year is traditionally the weakest for the company. In fact, GulfMark has exceeded analysts' earnings expectations in the past seven quarters by an average margin of 38.5%.

The company's gross margin for the trailing 12 months is 64.6%, compared with Seacor'sCKH 38.8%, Tidewater'sTDW 51.3%, Trico Marine'sTRMA 50.2% and the industry's 32.8%. GulfMark's operating margin for the trailing 12 months is 39.9%, compared with Seacor's 16.57%, Tidewater's 32%, Trico Marine's 25.02% and the industry's 15.98%.

GulfMark is in all of the right market segments, especially in the deep waters of the North Sea, Southeast Asia and now Brazil. In fact, one could argue that the company basically has a monopoly in the marine service sector in the three highest-margin areas of the world. Day rates in Southeast Asia have ballooned by 60%-plus year over year, and GulfMark is just starting to do business with Petrobras regarding Petrobras' new oil findings. Normally conservative, management was extremely bullish on the company's future.