Tidewater (NYSE:TDW) recently surprised Wall Street by warning (yes, warning season is upon us) that its fiscal fourth-quarter earnings would fall below expectations. The warning was not the one- or two-cent variety, either. Its earnings estimate now calls for $0.17 to $0.22, down from an original expectation of $0.30 a share.

Since Tidewater is the world's largest provider of vessels serving offshore energy drilling and a member of the oil services group, this development deserves attention. The warning also created some concern for me, since I just recently wrote a positive article on the oil services group.

I am left to wonder: Should it still be considered a leader -- perhaps even a barometer-- for the oil services industry? Would this be the beginning of additional warnings, or would this news be limited to a single company?

To find an answer, I decided to compare Tidewater's recent historical performance with other recognized leaders in the oil services group. If we determine that Tidewater is an industry leader, then the probability of other companies warning rises. If not, then it's more likely that this is a company-specific event.

The charts below should help us. It shows the year-over-year (2003/2002) quarterly growth comparisons for sales and earnings. Therefore, the March column is a comparison between the quarter ending in March 2003 and March 2002, June is June 2003 over June 2002, and so on. Because of the improving economy, the comparisons should improve, especially in the last half of the year.

Sales Growth (2003/2002) March June Sept. Dec.
Tidewater -9% 3% 4% 4%
Schlumberger 3% 7% 3% 11%
Halliburton 2% 11% 39% 63%
Smith International -2% 10% 19% 29%
Transocean -8% - 7% - 10% - 11%


Earnings Growth (2003/2002) March June Sept. Dec.
Tidewater -34% -22% -46% - 24%
Schlumberger - 4% 15% 29% 92%
Halliburton 5% 67% 14% 46%
Smith International -31% 11% 75% 128%
Transocean -38% n/a* -82% - 78%


*Transocean's June quarterly earnings growth is not available
 because it reported a loss for the June 2003 quarter.

March comparisons appear to be difficult across the board. However, if you look closely at Schlumberger (NYSE:SLB), Halliburton (NYSE:HAL), and Smith International (NYSE:SII), you will notice that earnings and sales growth began to accelerate dramatically starting with the June quarter. This is not the case with Tidewater or Transocean (NYSE:RIG). Transocean also depends on offshore vessels and did not experience a similar rebound in earnings and sales.

There were other telltale signs that Tidewater may not be a leader. The relative strength of the stock before the disappointing announcement was around 15, meaning the stock outperformed only 15% of 6,000 stocks tracked by Investor's Business Daily. Rarely, if ever, is an industry leader defined by weak sales growth, declining earnings, and poor relative performance in an improving economy.

While we have learned that it's probably wise to avoid individual companies that rely on "vessels that provide offshore drilling," I am concluding, for now, that the rest of the oil services sector should not be affected by Tidewater's warning.

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Fool contributor Glen Trematore can be found training for endurance events in the parks of Virginia Beach. He has no stake in any of the companies mentioned this article.