Tidewater (TDW) Marked As A Dead Cat Bounce Stock

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 "dead cat bounce" (down big yesterday but up big today) 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 $14.9 million
  • TDW has traded 1.4 million shares today
  • TDW is up 3.1% today
  • TDW was down 5.4% yesterday

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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 company operates in Americas, Asia/Pacific, Middle East/North Africa, and Sub-Saharan Africa/Europe segments. The stock currently has a dividend yield of 4.2%. Currently there are three analysts that rate Tidewater a buy, two analysts rate it a sell, and two rate it a hold.

The average volume for Tidewater has been 1.4 million shares per day over the past 30 days. Tidewater has a market cap of $1.11 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.9 and a short float of 36.1% with 25.54 days to cover. Shares are down 30.8% year-to-date as of the close of trading on Thursday.

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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 120.9% when compared to the same quarter one year ago, falling from $43.42 million to -$9.08 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 57.72%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 121.59% 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 two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, TIDEWATER INC swung to a loss, reporting -$1.40 versus $2.83 in the prior year. This year, the market expects an improvement in earnings ($0.36 versus -$1.40).
  • TDW, with its decline in revenue, slightly underperformed the industry average of 1.8%. Since the same quarter one year prior, revenues fell by 11.7%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

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