Tidewater Inc (TDW, Financial) is experiencing a daily loss of -6.86 %, though it has seen a 3-month gain of 17.49%. The company's Earnings Per Share (EPS) stands at 0.94. This article aims to answer the question: Is Tidewater's stock significantly overvalued? Let's delve into a detailed valuation analysis of Tidewater.
A Snapshot of Tidewater Inc (TDW, Financial)
Tidewater provides offshore service vessels and marine support services to the global offshore energy industry. It operates a diversified fleet of marine service vessels, offering support for all phases of offshore exploration, field development, and production. The company operates primarily in the Americas, Asia Pacific, Middle East, Europe/Mediterranean, and West Africa, with most of its revenue derived from West Africa.
With a share price of $63.55, Tidewater has a market cap of $3.30 billion. However, the estimated fair value of the stock, known as the GF Value, is $19.81, suggesting that the stock might be significantly overvalued.
Understanding the GF Value
The GF Value is a unique measure of a stock's fair value, calculated based on historical trading multiples, a GuruFocus adjustment factor based on past returns and growth, and future business performance estimates. The GF Value Line on our summary page provides an overview of the stock's ideal trading value.
According to the GF Value, Tidewater (TDW, Financial)'s stock is believed to be significantly overvalued. This suggests that the long-term return of its stock is likely to be much lower than its future business growth.
Tidewater's Financial Strength
Investing in companies with low financial strength could result in permanent capital loss. Tidewater has a cash-to-debt ratio of 0.94, ranking better than 58.28% of 1026 companies in the Oil & Gas industry. This suggests a strong balance sheet.
Profitability and Growth of Tidewater
Investing in profitable companies, especially those with consistent profitability over the long term, is less risky. Tidewater's profitability is ranked 3 out of 10, indicating poor profitability. The company's growth ranks worse than 61.16% of 860 companies in the Oil & Gas industry.
ROIC vs WACC
Comparing the company's Return on invested capital (ROIC) to its Weighted average cost of capital (WACC) is another way to evaluate its profitability. Over the past 12 months, Tidewater's ROIC was 5.81, while its WACC came in at 12.57.
Conclusion
In summary, Tidewater's stock is believed to be significantly overvalued. The company's financial condition is strong, but its profitability is poor. To learn more about Tidewater stock, you can check out its 30-Year Financials here.
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