Why Tidewater (TDW) Stock Is Down Today

NEW YORK (TheStreet) -- Tidewater (TDW) was falling -4.8% to $51.91 Monday after Morgan Stanley (MS) downgraded the stock to "underweight" from "overweight."

The bank lowered its price target for the company to $50 from $59. The firm said demand for Tidewater's OSV fleet in 2015 will be in the low single-digits while supply growth will be in the mid-teens.

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Separately, TheStreet Ratings team rates TIDEWATER INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate TIDEWATER INC (TDW) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • TDW's revenue growth has slightly outpaced the industry average of 11.0%. Since the same quarter one year prior, revenues rose by 12.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has increased to $34.79 million or 11.45% when compared to the same quarter last year. Despite an increase in cash flow, TIDEWATER INC's cash flow growth rate is still lower than the industry average growth rate of 49.39%.
  • Despite currently having a low debt-to-equity ratio of 0.57, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that TDW's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.85 is high and demonstrates strong liquidity.
  • 40.06% is the gross profit margin for TIDEWATER INC which we consider to be strong. Regardless of TDW's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 11.80% trails the industry average.
  • You can view the full analysis from the report here: TDW Ratings Report

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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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