Barbarian At The Gate: Tidewater (TDW)

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.

Trade-Ideas LLC identified Tidewater ( TDW) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Tidewater as such a stock due to the following factors:

  • TDW has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $43.2 million.
  • TDW has traded 1.6 million shares today.
  • TDW traded in a range 266.1% of the normal price range with a price range of $3.74.
  • TDW traded above its daily resistance level (quality: 82 days, meaning that the stock is crossing a resistance level set by the last 82 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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More details on TDW:

Tidewater Inc. provides offshore service vessels and marine support services through the operation of a fleet of marine service vessels to the offshore energy industry worldwide. The stock currently has a dividend yield of 3.7%. Currently there are 3 analysts that rate Tidewater a buy, 2 analysts rate it a sell, and 1 rates it a hold.

The average volume for Tidewater has been 1.6 million shares per day over the past 30 days. Tidewater has a market cap of $1.3 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.98 and a short float of 20.8% with 10.76 days to cover. Shares are down 16.2% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Tidewater as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

Highlights from the ratings report include:
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Energy Equipment & Services industry. The net income has significantly decreased by 1377.1% when compared to the same quarter one year ago, falling from $12.58 million to -$160.69 million.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Energy Equipment & Services industry and the overall market, TIDEWATER INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 45.64%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 1424.00% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • TIDEWATER INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, TIDEWATER INC reported lower earnings of $2.83 versus $3.04 in the prior year. This year, the market expects an improvement in earnings ($3.64 versus $2.83).
  • 41.70% 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, TDW's net profit margin of -41.46% significantly underperformed when compared to the industry average.

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