Please ensure Javascript is enabled for purposes of website accessibility

Why Oceaneering International Stock Just Popped 11.5%

By Rich Smith - Feb 25, 2021 at 11:28AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The underwater robotics specialist was supposed to lose money, but it earned a profit instead (sort of).

What happened

Shares of underwater robotics specialist Oceaneering International (OII 1.86%) shot out of the water this morning, rising 11.5% through 10:30 a.m. EST after crushing analyst earnings projections for fiscal Q4 2020 last night.

Expected to lose $0.20 per share (pro forma), Oceaneering delivered instead a $0.02 per-share profit (also pro forma).  

Robotic fish underwater near a rock

Image source: Getty Images.

So what

That's a pretty big beat, even if Oceaneering did "miss" slightly on revenue (doing $424.3 million in business during the quarter, instead of analysts' hoped-for $425 million). And yet, the news wasn't unqualifiedly good.  

Sales for the fiscal fourth quarter declined 24% year over year, and total sales for the year declined 11%. When calculated according to generally accepted accounting principles (GAAP), Oceaneering's Q4 profit was actually a loss -- $0.25 per share -- and it lost $5.01 per share for the full year.

Year over year, those losses were better than Q4 2019 (when Oceaneering lost $2.66) but worse than 2019 as a whole (when it lost $3.52).

Another plus for the company: Q4's free cash flow was good enough that it wiped out cash burn from all three preceding quarters. For the whole year, Oceaneering generated $76 million in cash profit.

Now what

And Oceaneering says it will do it again in 2021. "Our priority continues to be generating cash," said the company. And guiding investors on what, specifically, to expect in 2021, management said it will "yield positive free cash flow in excess of the amount generated in 2020" this year, with positive operating profits. Revenue will be "relatively flat" -- which is at least better than down again -- assuming "no significant incremental COVID-19 impacts and generally stable oil and gas prices."

Simply put, after a long descent, Oceaneering seems to have finally found the ocean floor -- and it's ready to ascend again.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Oceaneering International, Inc. Stock Quote
Oceaneering International, Inc.
$10.94 (1.86%) $0.20

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/16/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.