Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Tidewater Shares Get a Nice Bump From a Less-Than-Expected Loss This Quarter

By Tyler Crowe - Feb 3, 2016 at 3:56PM

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

Wall Street is just happy that things weren't as bad as it expected.

What: Shares of Tidewater ( TDW ) are up 12% at 3:00 p.m. ET today after announcing quarterly earnings results that were not as bad as Wall Street expected.

So what: This is one of those situations where Wall Street is just happy that things weren't as bad as it predicted. Tidewater's fiscal third-quarter results published after the market closed yesterday that showed the company's per-share loss to be $0.07 after adjusting for asset impairment costs. By comparison, consensus estimates compiled by S&P Capital IQ expected Tidewater to post a $0.33 loss for the quarter. 

The biggest difference for Tidewater this past quarter was its ability to cut costs. The company was able to cut its vessel operating and SG&A costs by 38% compared to the same quarter last year, which helped to offset a similar decline in revenue. Keeping its cash costs down enabled the company to generate some free cash flow that was put to paying down a portion of debt. 

As you can guess, though, the good news pretty much stopped there. Utilization rates for the company's fleet dell across the board to 58.4%, and the average dayrate for part of Tidewater's fleet fell by 25%. With another six of its eight vessels under construction to be delivered in 2016, the company will likely find itself with a few too many vessels when the market for offshore drilling support vessels is weak. 

Now what: Tidewater did a pretty commendable job of keeping its costs down in the quarter to keep from falling too deep in the red, and Wall Street is rewarding that today with a double digit stock bump. With the market for offshore drilling and production waning and costs for new vessels coming, however, it may be a little too early to get overly optimistic about Tidewater's longer-term prospects.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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

Tidewater Inc. Stock Quote
Tidewater Inc.

*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 12/02/2021.

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

Our Most Popular Articles

Premium Investing Services

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