Stressed out Tidewater (TDW) could see some relief if it can produce solid fourth-quarter earnings results. Despite persistent macro headwinds, the company has been able to move off of year-to-date lows, though the stock is down nearly 17% year to date as of Tuesday's close.
Tidewater's stock had been moving steadily until March 4, when the World Bank decided to partially lift a stay on the company's compensation claim against Venezuela. The decision caused the stock to spike more than 72%, but since then Tidewater has steadily come back down to earth.
The offshore oil drilling service vessel provider is scheduled to release fiscal fourth-quarter earnings results after the closing bell Wednesday. Tidewater is expected to swing to a loss after reporting earnings of $0.50 per share on revenue of $324.76 million in the year-ago period. Analysts forecast a net loss of $0.59 per share on revenue of $192.39 million. In the previous quarter, the company reported a net loss of $0.07 per share on revenue of $218.2 million, a 43.7% decline from the year ago period.
The negative turn the company's bottom line has taken is understandable, however, as oil prices are 15% lower today than they were a year ago.
Like most of the oil and oil-services stocks in our Stressed Out index, Tidewater's fate is tethered to the price of oil, and while the commodity has made strides in recent months, there are signs that the rally is beginning to peter out.
But there has been evidence recently that investors are looking for a reason to stick with Tidewater in spite of the volatile nature of the price of oil. Following its third-quarter earnings release in February, the company's stock climbed more than 20%.
Tidewater has also been able to keep its debt level steady over the past eight quarters, despite the oil downturn, while its cash reserves also remain relatively unchanged.
Earlier this year the company announced that it would be suspending its quarterly dividend as well as its common stock repurchase program. Tidewater said that the moves will save it $47 million on an annualized basis on top of the $100 million that had been authorized under the buyback plan.
Additionally, the World Bank's decision to partially lift a stay of enforcement on a compensation claim of $46.4 million payable by Venezuela will net the company another $27.4 million plus interest. The judgement against Venezuela stems from a May 2009 incident where 11 Tidewater ships were seized by Venezuelan officials as part of the country's effort to nationalize its crude reserves.
Whether those cash infusions will make the company's bottom line more stable remains to be seen, but with the stock rising nearly 5% on even volume ahead of this afternoon's release, Tidewater clearly still has fans that are betting on a rebound.
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