Tidewater Inc Valuation – August 2018 $TDW

Company Profile (excerpt from Reuters): Tidewater Inc., incorporated on February 7, 1956, provides offshore service vessels and marine support services to the global offshore energy industry. The Company operates a fleet of marine service vessels. The Company operates through four segments: Americas, Asia/Pacific, Middle East/North Africa and Sub-Saharan Africa/Europe. Its Americas segment includes the activities of the Company’s North American operations, which include operations in the United States Gulf of Mexico (GOM), and the United States and Canadian coastal waters of the Pacific and Atlantic oceans, as well as operations of offshore Mexico, Trinidad and Brazil. The Asia/Pacific segment includes its Australian and Southeast Asian and Western Pacific operations. The Middle East/North Africa segment includes its operations in the Mediterranean and Red Seas, the Black Sea, the Arabian Gulf and offshore India. The Company’s Sub-Saharan Africa/Europe segment includes operations conducted along the East and West Coasts of Africa, as well as operations in and around the Caspian Sea, the North Sea, and certain other arctic/cold water markets.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of TDW – August 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $813,856,800 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 4.71 Pass
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -75000033.33% Fail
6. Moderate PEmg Ratio PEmg < 20 -41.35 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.78 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 4.71 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.70 Pass
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg -$0.75
MG Growth Estimate -4.25%
MG Value $5.25
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth -$10.87
MG Value based on 0% Growth -$6.37
Market Implied Growth Rate -24.92%
Current Price $31.01
% of Intrinsic Value 591.21%

Tidewater Inc. does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, insufficient earnings stability or growth over the last ten years, and the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the lack of earnings stability or growth over the last five years, and the lack of dividends. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $0 in 2014 to an estimated $-0.75 for 2018. This level of negative earnings does not support a positive valuation.As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Tidewater Inc. revealed the company was trading above its Graham Number of $0. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was -41.35, which was below the industry average of 59.52, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $5.25.

Tidewater Inc. scores quite poorly in the ModernGraham grading system, with an overall grade of D.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) $5.25
Graham Number $0.00
PEmg -41.35
Current Ratio 4.71
PB Ratio 0.78
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 6/1/2018
Total Current Assets $797,331,000
Total Current Liabilities $169,121,000
Long-Term Debt $438,559,000
Total Assets $1,643,542,000
Intangible Assets $0
Total Liabilities $668,016,000
Shares Outstanding (Diluted Average) 24,654,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate -$2.25

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$0.75

Recommended Reading:

Other ModernGraham posts about the company

Tidewater Inc Valuation – February 2017 $TDW
Tidewater Inc Valuation – August 2016 $TDW
Tidewater Inc. Analysis – 2015 Update $TDW
21 Companies in the Spotlight This Week – June 14, 2014
Tidewater Inc. Annual Valuation – 2014 $TDW

Other ModernGraham posts about related companies

Carrizo Oil & Gas Inc Valuation – August 2018 $CRZO
Denbury Resources Inc Valuation – August 2018 $DNR
California Resources Corp Valuation – August 2018 $CRC
Crew Energy Inc Valuation – August 2018 $TSE-CR
Superior Energy Services Inc Valuation – August 2018 $SPN
Crescent Point Energy Corp Valuation – August 2018 $TSE-CPG
Kelt Exploration Ltd Valuation – August 2018 $TSE-KEL
Canadian Natural Resources Ltd Valuation – August 2018 $TSE:CNQ
SM Energy Co Valuation – August 2018 $SM
Surge Energy Inc Valuation – July 2018 $TSE:SGY

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Tidewater Inc Valuation – February 2017 $TDW

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Stocks for Using A Benjamin Graham Value Investing Strategy – February 2017.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Tidewater Inc (TDW) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Tidewater Inc. provides offshore service vessels and marine support services. The Company operates through four segments: Americas, Asia/Pacific, Middle East/North Africa and Sub-Saharan Africa/Europe. Its Americas segment includes the activities of the Company’s North American operations, which include operations in the United States Gulf of Mexico (GOM), and the United States and Canadian coastal waters of the Pacific and Atlantic oceans, as well as operations of offshore Mexico, Trinidad and Brazil. The Asia/Pacific segment includes its Australian and Southeast Asian and Western Pacific operations. The Middle East/North Africa segment includes its operations in the Mediterranean and Red Seas, the Black Sea, the Arabian Gulf and offshore India. The Company’s Sub-Saharan Africa/Europe segment includes operations conducted along the East and West Coasts of Africa, as well as operations in and around the Caspian Sea, the North Sea, and certain other arctic/cold water markets.

TDW Chart

TDW data by YCharts

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ModernGraham Valuation of TDW – February 2017

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $65,446,225 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.50 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -193.73% Fail
6. Moderate PEmg Ratio PEmg < 20 -0.27 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.04 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.50 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.00 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

Stage 2: Determination of Intrinsic Value

EPSmg -$5.05
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth -$73.17
MG Value based on 0% Growth -$42.89
Market Implied Growth Rate -4.38%
Current Price $1.36
% of Intrinsic Value N/A

Tidewater Inc. does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, low current ratio, insufficient earnings stability or growth over the last ten years, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings stability or growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $3.07 in 2013 to an estimated $-5.05 for 2017. This level of negative earnings does not support a positive valuation.As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Tidewater Inc. revealed the company was trading above its Graham Number of $0. The company pays a dividend of $0.25 per share, for a yield of 18.4%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was -0.27, which was below the industry average of 69.19, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-29.99.

Tidewater Inc. scores quite poorly in the ModernGraham grading system, with an overall grade of D+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$29.99
Graham Number $0.00
PEmg -0.27
Current Ratio 0.50
PB Ratio 0.04
Current Dividend $0.25
Dividend Yield 18.38%
Number of Consecutive Years of Dividend Growth 0

[/not-level-free]

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2016
Total Current Assets $1,164,504,000
Total Current Liabilities $2,340,910,000
Long-Term Debt $0
Total Assets $4,315,199,000
Intangible Assets $0
Total Liabilities $2,575,893,000
Shares Outstanding (Diluted Average) 47,068,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate -$13.34
Mar2016 -$3.41
Mar2015 -$1.34
Mar2014 $2.82
Mar2013 $3.03
Mar2012 $1.70
Mar2011 $2.05
Mar2010 $5.02
Mar2009 $7.89
Mar2008 $6.39
Mar2007 $6.31
Mar2006 $4.07
Mar2005 $1.78
Mar2004 $0.73
Mar2003 $1.57
Mar2002 $2.41
Mar2001 $1.53
Mar2000 $1.37
Mar1999 $3.68
Mar1998 $5.18
Mar1997 $2.35

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$5.05
Mar2016 -$0.41
Mar2015 $1.27
Mar2014 $2.70
Mar2013 $3.07
Mar2012 $3.60
Mar2011 $4.87
Mar2010 $6.17
Mar2009 $6.26
Mar2008 $4.91
Mar2007 $3.75
Mar2006 $2.35
Mar2005 $1.53
Mar2004 $1.44
Mar2003 $1.90
Mar2002 $2.32
Mar2001 $2.46

Recommended Reading:

Other ModernGraham posts about the company

Tidewater Inc Valuation – August 2016 $TDW
Tidewater Inc. Analysis – 2015 Update $TDW
21 Companies in the Spotlight This Week – June 14, 2014
Tidewater Inc. Annual Valuation – 2014 $TDW
19 Companies in the Spotlight This Week – 3/15/14

Other ModernGraham posts about related companies

Occidental Petroleum Corp Valuation – February 2017 $OXY
Carrizo Oil & Gas Inc Valuation – Initial Coverage $CRZO
Denbury Resources Inc Valuation – February 2017 $DNR
California Resources Corp Valuation – Initial Coverage $CRC
Crew Energy Inc Valuation – Initial Coverage $TSE:CR
Exxon Mobil Corp Valuation – February 2017 $XOM
Superior Energy Services Inc Valuation – Initial Coverage $SPN
2017 Oil & Gas Industry Review
Spartan Energy Corp Valuation – Initial Coverage $TSE:SPE
Crescent Point Energy Corp Valuation – Initial Coverage $TSE:CPG

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Tidewater Inc Valuation – August 2016 $TDW

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Companies Benjamin Graham Would Invest In Today – July 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Tidewater Inc (TDW) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Tidewater Inc. provides offshore service vessels and marine support services. The Company operates through four segments: Americas, Asia/Pacific, Middle East/North Africa and Sub-Saharan Africa/Europe. Its Americas segment includes the activities of the Company’s North American operations, which include operations in the United States Gulf of Mexico (GOM), and the United States and Canadian coastal waters of the Pacific and Atlantic oceans, as well as operations of offshore Mexico, Trinidad and Brazil. The Asia/Pacific segment includes its Australian and Southeast Asian and Western Pacific operations. The Middle East/North Africa segment includes its operations in the Mediterranean and Red Seas, the Black Sea, the Arabian Gulf and offshore India. The Company’s Sub-Saharan Africa/Europe segment includes operations conducted along the East and West Coasts of Africa, as well as operations in and around the Caspian Sea, the North Sea, and certain other arctic/cold water markets.

TDW Chart

TDW data by YCharts

[level-free]
To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

[/level-free]
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Downloadable PDF version of this valuation:

ModernGraham Valuation of TDW – August 2016

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $151,609,159 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.53 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -148.50% Fail
6. Moderate PEmg Ratio PEmg < 20 -1.54 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.07 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.53 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.00 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

Stage 2: Determination of Intrinsic Value

TDW value chart August 2016

EPSmg -$2.14
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth -$30.97
MG Value based on 0% Growth -$18.16
Market Implied Growth Rate -5.02%
Current Price $3.28
% of Intrinsic Value N/A

Tidewater Inc. does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, low current ratio, insufficient earnings stability or growth over the last ten years, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings stability or growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $3.07 in 2013 to an estimated $-2.14 for 2017. This level of negative earnings does not support a positive valuation.As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Tidewater Inc. revealed the company was trading above its Graham Number of $0. The company pays a dividend of $0.75 per share, for a yield of 22.9%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was -1.54, which was below the industry average of 55.24, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-29.41.

Tidewater Inc. scores quite poorly in the ModernGraham grading system, with an overall grade of D+.

Stage 3: Information for Further Research

TDW charts August 2016

Net Current Asset Value (NCAV) -$29.41
Graham Number $0.00
PEmg -1.54
Current Ratio 0.53
PB Ratio 0.07
Current Dividend $0.75
Dividend Yield 22.87%
Number of Consecutive Years of Dividend Growth 0

[/not-level-free]

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 6/1/2016
Total Current Assets $1,281,154,000
Total Current Liabilities $2,431,983,000
Long-Term Debt $0
Total Assets $4,877,858,000
Intangible Assets $0
Total Liabilities $2,665,351,000
Shares Outstanding (Diluted Average) 47,068,000

Earnings Per Share History

Next Fiscal Year Estimate -$4.61
Mar2016 -$3.41
Mar2015 -$1.34
Mar2014 $2.82
Mar2013 $3.03
Mar2012 $1.70
Mar2011 $2.05
Mar2010 $5.02
Mar2009 $7.89
Mar2008 $6.39
Mar2007 $6.31
Mar2006 $4.07
Mar2005 $1.78
Mar2004 $0.73
Mar2003 $1.57
Mar2002 $2.41
Mar2001 $1.53
Mar2000 $1.37
Mar1999 $3.68
Mar1998 $5.18
Mar1997 $2.35

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate -$2.14
Mar2016 -$0.41
Mar2015 $1.27
Mar2014 $2.70
Mar2013 $3.07
Mar2012 $3.60
Mar2011 $4.87
Mar2010 $6.17
Mar2009 $6.26
Mar2008 $4.91
Mar2007 $3.75
Mar2006 $2.35
Mar2005 $1.53
Mar2004 $1.44
Mar2003 $1.90
Mar2002 $2.32
Mar2001 $2.46

Recommended Reading:

Other ModernGraham posts about the company

Tidewater Inc. Analysis – 2015 Update $TDW
21 Companies in the Spotlight This Week – June 14, 2014
Tidewater Inc. Annual Valuation – 2014 $TDW
19 Companies in the Spotlight This Week – 3/15/14
Tidewater Inc. (TDW) Quarterly Valuation

Other ModernGraham posts about related companies

Occidental Petroleum Corp Valuation – August 2016 $OXY
Valero Energy Corporation – August 2016 $VLO
Chevron Corp Valuation – August 2016 $CVX
Exxon Mobil Corporation Valuation – August 2016 $XOM
National-Oilwell Varco Inc Valuation – August 2016 $NOV
Newfield Exploration Co Valuation – August 2016 $NFX
EOG Resources Inc Valuation – July 2016 $EOG
Noble Corp PLC Valuation – July 2016 $NE
Baker Hughes Inc Valuation – July 2016 $BHI
Rowan Companies PLC Valuation – July 2016 $RDC

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Tidewater Inc. Analysis – 2015 Update $TDW

tidewater_logoBenjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 5 Most Undervalued Companies for the Defensive Investor – June 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Tidewater Inc. (TDW) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Tidewater Inc. provides offshore service vessels and marine support services to the global offshore energy industry through the operation of a fleet of marine service vessels. The Company operates through four segments: Americas, Asia/Pacific, Middle East/North Africa, and Sub-Saharan Africa/Europe. The Company’s vessels and associated vessel services provide support for all phases of offshore exploration, field development and production. These services include towing of, and anchor handling for, mobile offshore drilling units; transporting supplies and personnel necessary to sustain drilling, workover, and production activities; offshore construction, remotely operated vehicle (ROV) operations, and seismic and subsea support; and various specialized services, such as pipe and cable laying. As of September 30, 2014, the Company owned or chartered 286 vessels (of which 11 were owned by joint ventures and 15 were stacked) and 6 ROVs available to serve the global energy industry.

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 3/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – FAIL
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – FAIL
  3. Earnings Stability – positive earnings per share for at least 10 straight years – FAIL
  4. Dividend Record – has paid a dividend for at least 10 straight years – PASS
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – FAIL
  6. Moderate PEmg ratio – PEmg is less than 20 – PASS
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – PASS

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 2/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – PASS
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – FAIL
  3. Earnings Stability – positive earnings per share for at least 5 years – FAIL
  4. Dividend Record – currently pays a dividend – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – FAIL

Valuation Summary

Key Data:

Recent Price $23.21
MG Value $0.00
MG Opinion #DIV/0!
Value Based on 3% Growth $18.48
Value Based on 0% Growth $10.83
Market Implied Growth Rate 4.85%
Net Current Asset Value (NCAV) -$30.06
PEmg 18.21
Current Ratio 1.80
PB Ratio 0.44

Balance Sheet – March 2015

Current Assets $869,000,000
Current Liabilities $482,000,000
Total Debt $1,524,000,000
Total Assets $4,756,000,000
Intangible Assets $0
Total Liabilities $2,282,000,000
Outstanding Shares 47,000,000

Earnings Per Share

2015 -$1.34
2014 $2.82
2013 $3.03
2012 $1.70
2011 $2.05
2010 $5.02
2009 $7.89
2008 $6.39
2007 $6.31
2006 $4.07
2005 $1.78

Earnings Per Share – ModernGraham

2015 $1.27
2014 $2.70
2013 $3.07
2012 $3.60
2011 $4.87
2010 $6.17

Dividend History

Conclusion:

Tidewater is not suitable for either the Defensive Investor or the Enterprising Investor.  The Defensive Investor is concerned with the small market capitalization, low current ratio, and the insufficient earnings growth or stability over the last ten years.  The Enterprising Investor is concerned with the level of debt relative to the net current assets, and the lack of earnings growth or stability over the last five years.  As a result, value investors following the ModernGraham approach based on Benjamin Graham’s methods should explore other opportunities.  As for a valuation, the company appears to be overvalued after seeing its EPSmg (normalized earnings) drop from $4.87 in 2011 to only an estimated $1.27 for 2015.  This level of demonstrated earnings growth does not support the market’s implied estimate of 4.85% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value well below the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Tidewater Inc. (TDW)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Disclaimer:  The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

 

Tidewater Inc. Annual Valuation – 2014 $TDW

tidewater_logoBenjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 5 Undervalued Companies for the Enterprising Investor Near 52 Week Lows.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a specific look at how Tidewater Inc. (TDW) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Tidewater Inc. provides offshore supply vessels and marine support services to the offshore energy industry through the operation of marine service vessels. The Company conducts its operations through wholly owned United States and international subsidiaries. It provides offshore vessel services in support of all phases of offshore exploration, field development and production, including towing of, and anchor handling for, mobile offshore drilling units; transporting supplies and personnel necessary to sustain drilling, workover and production activities; offshore construction, ROV operations and seismic support, and a variety of specialized services, such as pipe and cable laying. As of March 31, 2013, the Company had 328 vessels (of which 10 were owned by joint ventures, 51 were stacked and two were withdrawn from service) servicing the global energy industry. The Company operates in four segments: Americas, Asia/Pacific, Middle East/North Africa, and Sub-Saharan Africa/Europe.

TDW Chart

TDW data by YCharts

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 5/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – PASS
  3. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
  4. Dividend Record – has paid a dividend for at least 10 straight years – PASS
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – FAIL
  6. Moderate PEmg ratio – PEmg is less than 20 – FAIL
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – PASS

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 3/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – PASS
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – FAIL
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – FAIL

Valuation Summary

Key Data:

Recent Price $54.80
MG Value $0.00
MG Opinion Overvalued
Value Based on 3% Growth $39.09
Value Based on 0% Growth $22.92
Market Implied Growth Rate 5.91%
Net Current Asset Value (NCAV) -$27.87
PEmg 20.33
Current Ratio 2.04
PB Ratio 1.02

Balance Sheet – 3/31/2014

Current Assets $820,200,000
Current Liabilities $401,700,000
Total Debt $1,505,400,000
Total Assets $4,885,800,000
Intangible Assets $283,700,000
Total Liabilities $2,206,400,000
Outstanding Shares 49,730,000

Earnings Per Share

2014 $2.82
2013 $3.03
2012 $1.70
2011 $2.05
2010 $5.02
2009 $7.89
2008 $6.43
2007 $6.31
2006 $4.07
2005 $1.78
2004 $0.73

Earnings Per Share – ModernGraham

2014 $2.70
2013 $3.07
2012 $3.60
2011 $4.88
2010 $6.18
2009 $6.27

Dividend History

TDW Dividend Chart

TDW Dividend data by YCharts

Conclusion:

Tidewater is not suitable for either the Defensive Investor or the Enterprising Investor at this time.  The Defensive Investor has concerns with the lack of sufficient earnings growth over the last ten years and the high PEmg ratio while the Enterprising Investor is concerned with the high level of debt relative to net current assets and the lack of earnings growth over the last five years.  As a result, value investors following the ModernGraham approach based on Benjamin Graham’s methods should seek other opportunities.  As for a valuation, the company appears significantly overvalued after seeing its EPSmg (normalized earnings) drop from $6.18 in 2010 to $2.70 for 2014.  This demonstrated shrinking of earnings does not support the market’s implied estimate of 5.91% earnings growth and leads the ModernGraham valuation model, which is based on Benjamin Graham’s formula, to return an estimate of intrinsic value well below the market price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Tidewater Inc. (TDW)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Be sure to review the previous ModernGraham Valuations of Tidewater Inc. (TDW)!

Disclaimer:  The author did not hold a position in Tidewater Inc. (TDW) or any other company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.

Logo taken from wikipedia; this article is not affiliated with the company in any manner.

Tidewater Inc. (TDW) Quarterly Valuation

tidewater_logoBenjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a specific look at how Tidewater Inc. fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Tidewater Inc. provides offshore supply vessels and marine support services to the offshore energy industry through the operation of marine service vessels. The Company conducts its operations through wholly owned United States and international subsidiaries. It provides offshore vessel services in support of all phases of offshore exploration, field development and production, including towing of, and anchor handling for, mobile offshore drilling units; transporting supplies and personnel necessary to sustain drilling, workover and production activities; offshore construction, ROV operations and seismic support, and a variety of specialized services, such as pipe and cable laying. As of March 31, 2013, the Company had 328 vessels (of which 10 were owned by joint ventures, 51 were stacked and two were withdrawn from service) servicing the global energy industry. The Company operates in four segments: Americas, Asia/Pacific, Middle East/North Africa, and Sub-Saharan Africa/Europe.

TDW Chart

TDW data by YCharts

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 6/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – PASS
  3. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
  4. Dividend Record – has paid a dividend for at least 10 straight years – PASS
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – FAIL
  6. Moderate PEmg ratio – PEmg is less than 20 – PASS
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – PASS

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 3/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – PASS
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – FAIL
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – FAIL

Valuation Summary

Key Data:

Recent Price $49.34
MG Opinion Overvalued
Value Based on 3% Growth $42.33
Value Based on 0% Growth $24.81
Market Implied Growth Rate 4.20%
Net Current Asset Value (NCAV) -$28.29
PEmg 16.90
Current Ratio 2.37
PB Ratio 0.93

Balance Sheet – 12/31/2013

Current Assets $803,900,000
Current Liabilities $339,200,000
Total Debt $1,464,000,000
Total Assets $4,847,400,000
Intangible Assets $283,700,000
Total Liabilities $2,207,500,000
Outstanding Shares 49,620,000

Earnings Per Share

2014 (Estimate) $3.49
2013 $3.03
2012 $1.70
2011 $2.05
2010 $5.02
2009 $7.89
2008 $6.43
2007 $6.31
2006 $4.07
2005 $1.78
2004 $0.73

Earnings Per Share – ModernGraham 

2014 (Estimate) $2.92
2013 $3.07
2012 $3.60
2011 $4.88
2010 $6.18
2009 $6.27

Dividend History

TDW Dividend Chart

TDW Dividend data by YCharts

Conclusion:

Tidewater is suitable for the Defensive Investor, having only failed the investor type’s earnings growth requirement.  The company is also suitable for the Enterprising Investor by default, despite having failed both the debt to net current asset requirement and the earnings growth requirement.  As a result, value investors seeking to follow the ModernGraham approach based on Benjamin Graham’s methods should keep Tidewater on a watch list and feel comfortable proceeding with further research, including a review of 5 Low PEmg Companies for the Enterprising Investor and 5 Outstanding Dow Components.  From a valuation perspective, the company does not perform very well, largely due to the lack of earnings growth over the last 5 years.  The company’s EPSmg (normalized earnings) have dropped from $6.18 in 2010 to an estimated $2.92 for 2014, a change that clearly does not support the market’s implied estimate for 4.20% earnings growth.  As a result, the ModernGraham valuation model finds that any value in the company must come from a source other than the earnings, though it should be noted that if the company can achieve a growth level of 3%, the value would be around $42 based on current EPSmg.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Tidewater Inc. (TDW)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

If you like our valuations, why not check out ModernGraham Stocks & Screens?  It’s a great way to review the valuations while screening for things like low PE ratio, undervalued companies, etc.!

Disclaimer:  The author did not hold a position in Tidewater Inc. (TDW) or any of the other companies listed in this article at the time of publication and had no intention of changing that position within the next 72 hours.

Logo taken from the Wikipedia; this article is not affiliated with the company in any manner.

ModernGraham Valuation: Tidewater Inc. (TDW)

moneyCompany Profile (obtained from Google Finance): Tidewater Inc. provides offshore supply vessels and marine support services to the offshore energy industry through the operation of marine service vessels. The Company conducts its operations through wholly owned United States and international subsidiaries. It provides offshore vessel services in support of all phases of offshore exploration, field development and production, including towing of, and anchor handling for, mobile offshore drilling units; transporting supplies and personnel necessary to sustain drilling, workover and production activities; offshore construction, ROV operations and seismic support, and a variety of specialized services, such as pipe and cable laying. As of March 31, 2013, the Company had 328 vessels (of which 10 were owned by joint ventures, 51 were stacked and two were withdrawn from service) servicing the global energy industry. The Company operates in four segments: Americas, Asia/Pacific, Middle East/North Africa, and Sub-Saharan Africa/Europe.

Defensive and Enterprising Investor Tests (What is the significance of these tests, and what is PEmg ratio?):

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 6/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – PASS
  3. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
  4. Dividend Record – has paid a dividend for at least 10 straight years – PASS
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – FAIL
  6. Moderate PEmg ratio – PEmg is less than 20 – PASS
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – PASS

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 4/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – PASS
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – FAIL
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary (Explanation of the ModernGraham Valuation Model)

Key Data:

MG Value $0 **Rare situation.  See conclusion.
MG Opinion Overvalued
Value Based on 3% Growth $44
Value Based on 0% Growth $26
Market Implied Growth Rate 5.25%
Net Current Asset Value (NCAV) -$29.01
PEmg 19.00
Current Ratio 2.26
PB Ratio 1.09

Balance Sheet – 9/30/2013 

Current Assets $681,800,000
Current Liabilities $301,300,000
Total Debt $1,445,600,000
Total Assets $4,754,600,000
Intangible Assets $340,000,000
Total Liabilities $2,120,000,000
Outstanding Shares 49,580,000

Earnings Per Share

2014 (Estimate) $3.86
2013 $3.03
2012 $1.70
2011 $2.05
2010 $5.02
2009 $7.89
2008 $6.39
2007 $6.31
2006 $4.07
2005 $1.78
2004 $0.73
2003 $1.57

Earnings Per Share – Modern Graham 

2014 (Estimate) $3.04
2013 $3.07
2012 $3.60
2011 $4.87
2010 $6.17
2009 $6.26

Conclusion:

Tidewater is a company that has had its earnings consistently fall over the recent historical period.  This is a company that once had outstanding valuations when its earnings were rising from 2004 to 2009, but since 2009 the EPSmg (normalized earnings) have steadily dropped.  It does appear that the earnings fall may be coming to an end, as the regular EPS have improved the last couple of years, and one would expect the ModernGraham valuation model to return a more attractive result in a year or two.  However, as it stands now the historical growth does not support the market’s implied rate of 5.25% and in fact the negative growth rate seen historically is enough to knock down the valuation from the model to $0.  As a result, any value from Tidewater at the current juncture is only justified by either the balance sheet or speculating; there is currently no basis in earnings for a positive value.  That said, the company does impress from the angle of the Defensive Investor and Enterprising Investor requirements, having qualifed as a Defensive Investor.  All investors should keep an eye on this company over the next couple years to determine if the valuation improves and if an opportunity for profit exists.

What do you think?  Do you agree that Tidewater Inc. is overvalued?  Is the company suitable for either Defensive Investors or Enterprising Investors?  Leave a comment or mention @ModernGraham on Twitter to discuss.

If you like our valuations, why not check out ModernGraham Stocks & Screens?  It’s a great way to review the valuations while screening for things like low PE ratio, undervalued companies, etc.!

Disclaimer:  The author did not hold a position in Tidewater Inc. at the time of publication and had no intention of entering into a position within the next 72 hours.

Photo Credit:  Andrew Magill

EQT Corp Valuation – January 2019 $EQT

Company Profile (excerpt from Reuters): EQT Corporation (EQT), incorporated on June 10, 2008, is a natural gas company. The Company operates through three segments: EQT Production, EQT Gathering and EQT Transmission. EQT Production is a natural gas producer in the Appalachian Basin. EQT Gathering and EQT Transmission provide gathering, transmission and storage services for the Company’s produced gas, as well as for independent third parties across the Appalachian Basin.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of EQT – January 2019

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $5,398,930,337 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.47 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -109.58% Fail
6. Moderate PEmg Ratio PEmg < 20 -175.52 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.34 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.47 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -5.53 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg -$0.12
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth -$1.75
MG Value based on 0% Growth -$1.03
Market Implied Growth Rate -92.01%
Current Price $21.18
% of Intrinsic Value N/A

EQT Corporation does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability or growth over the last ten years, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings stability or growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $2.31 in 2014 to an estimated $-0.12 for 2018. This level of negative earnings does not support a positive valuation.As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into EQT Corporation revealed the company was trading above its Graham Number of $0. The company pays a dividend of $0.12 per share, for a yield of 0.6% Its PEmg (price over earnings per share – ModernGraham) was -175.52, which was below the industry average of 41.28, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-43.19.

EQT Corporation scores quite poorly in the ModernGraham grading system, with an overall grade of D.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$43.19
Graham Number $0.00
PEmg -175.52
Current Ratio 0.47
PB Ratio 0.34
Current Dividend $0.12
Dividend Yield 0.57%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $1,234,658,000
Total Current Liabilities $2,646,076,000
Long-Term Debt $7,808,570,000
Total Assets $28,661,329,000
Intangible Assets $2,672,901,000
Total Liabilities $12,443,937,000
Shares Outstanding (Diluted Average) 259,560,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate -$5.90
Dec2017 $8.04
Dec2016 -$2.71
Dec2015 $0.56
Dec2014 $2.54
Dec2013 $2.57
Dec2012 $1.22
Dec2011 $3.19
Dec2010 $1.57
Dec2009 $1.19
Dec2008 $2.00
Dec2007 $2.10
Dec2006 $1.80
Dec2005 $2.10
Dec2004 $2.22
Dec2003 $1.34
Dec2002 $1.14
Dec2001 $1.13
Dec2000 $0.80
Dec1999 $0.51
Dec1998 -$0.19

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$0.12
Dec2017 $2.58
Dec2016 $0.18
Dec2015 $1.75
Dec2014 $2.31
Dec2013 $2.11
Dec2012 $1.86
Dec2011 $2.13
Dec2010 $1.64
Dec2009 $1.73
Dec2008 $2.01
Dec2007 $1.99
Dec2006 $1.86
Dec2005 $1.79
Dec2004 $1.53
Dec2003 $1.12
Dec2002 $0.90

Recommended Reading:

Other ModernGraham posts about the company

EQT Corporation Valuation – March 2018 $EQT
EQT Corporation Valuation – July 2016 $EQT
5 Speculative and Overvalued Companies to Avoid – May 2015
47 Companies in the Spotlight This Week – 5/16/15
EQT Corporation Annual Valuation – 2015 $EQT

Other ModernGraham posts about related companies

Helmerich & Payne Inc Valuation – January 2019 $HP
Williams Companies Inc Valuation – January 2019 $WMB
Exxon Mobil Corp Valuation – November 2018 $XOM
Chevron Corp Valuation – November 2018 $CVX
Cenovus Energy Inc Valuation – October 2018 $TSE-CVE
CNX Resources Corp Valuation – September 2018 $CNX
Carbo Ceramics Inc Valuation – August 2018 $CRR
Murphy Oil Corp Valuation – August 2018 $MUR
Suncor Energy Inc Valuation – August 2018 $TSE:SU
Tidewater Inc Valuation – August 2018 $TDW

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Helmerich & Payne Inc Valuation – January 2019 $HP

Company Profile (excerpt from Reuters): Helmerich & Payne, Inc., incorporated on February 29, 1944, is engaged in contract drilling of oil and gas wells for others. The Company operates in the contract drilling industry. The Company’s contract drilling business consists of three segments: U.S. Land, Offshore and International Land. The Company is also engaged in the ownership, development and operation of commercial real estate and the research and development of rotary steerable technology. Its real estate investments are located within Tulsa, Oklahoma, and include a shopping center containing approximately 441,000 leasable square feet, multi-tenant industrial warehouse properties containing approximately one million leasable square feet and approximately 210 acres of undeveloped real estate. The Company’s subsidiaries include Helmerich & Payne International Drilling Co. and Helmerich & Payne de Venezuela, C.A.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of HP – January 2019

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

 

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $5,825,900,373 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.96 Pass
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -63.64% Fail
6. Moderate PEmg Ratio PEmg < 20 39.29 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.34 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.96 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.67 Pass
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.36
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $19.72
MG Value based on 0% Growth $11.56
Market Implied Growth Rate 15.39%
Current Price $53.43
% of Intrinsic Value N/A

Helmerich & Payne, Inc. does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability or growth over the last ten years, and the high PEmg ratio. The Enterprising Investor has concerns regarding the lack of earnings stability or growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $5.34 in 2015 to an estimated $1.36 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 15.39% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Helmerich & Payne, Inc. revealed the company was trading above its Graham Number of $26.06. The company pays a dividend of $2.81 per share, for a yield of 5.3%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 39.29, which was below the industry average of 41.28, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-6.54.

Helmerich & Payne, Inc. receives an average overall rating in the ModernGraham grading system, scoring a C.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$6.54
Graham Number $26.06
PEmg 39.29
Current Ratio 2.96
PB Ratio 1.34
Current Dividend $2.81
Dividend Yield 5.26%
Number of Consecutive Years of Dividend Growth 20

Useful Links:

 

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $1,115,550,000
Total Current Liabilities $377,168,000
Long-Term Debt $493,968,000
Total Assets $6,214,867,000
Intangible Assets $137,984,000
Total Liabilities $1,832,132,000
Shares Outstanding (Diluted Average) 109,534,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.75
Sep2018 $4.37
Sep2017 -$1.20
Sep2016 -$0.54
Sep2015 $3.85
Sep2014 $6.44
Sep2013 $6.79
Sep2012 $5.34
Sep2011 $3.99
Sep2010 $1.45
Sep2009 $3.31
Sep2008 $4.34
Sep2007 $4.27
Sep2006 $2.77
Sep2005 $0.62
Sep2004 $0.05
Sep2003 $0.09
Sep2002 $0.27
Sep2001 $0.79
Sep2000 $0.82
Sep1999 $0.43

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.36
Sep2018 $1.97
Sep2017 $1.54
Sep2016 $3.40
Sep2015 $5.34
Sep2014 $5.65
Sep2013 $4.90
Sep2012 $3.86
Sep2011 $3.24
Sep2010 $2.99
Sep2009 $3.53
Sep2008 $3.22
Sep2007 $2.30
Sep2006 $1.13
Sep2005 $0.32
Sep2004 $0.25
Sep2003 $0.40

Recommended Reading:

Other ModernGraham posts about the company

Helmerich & Payne Inc Valuation – March 2018 $HP
Helmerich & Payne Inc Valuation – June 2016 $HP
Helmerich & Payne Inc Valuation – November 2015 Update $HP
Dividend Growth Stocks for the Intelligent Investor – November 2015
10 Undervalued Companies for the Defensive Dividend Stock Investor – November 2015

Other ModernGraham posts about related companies

Williams Companies Inc Valuation – January 2019 $WMB
Exxon Mobil Corp Valuation – November 2018 $XOM
Chevron Corp Valuation – November 2018 $CVX
Cenovus Energy Inc Valuation – October 2018 $TSE-CVE
CNX Resources Corp Valuation – September 2018 $CNX
Carbo Ceramics Inc Valuation – August 2018 $CRR
Murphy Oil Corp Valuation – August 2018 $MUR
Suncor Energy Inc Valuation – August 2018 $TSE:SU
Tidewater Inc Valuation – August 2018 $TDW
Carrizo Oil & Gas Inc Valuation – August 2018 $CRZO

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Williams Companies Inc Valuation – January 2019 $WMB

Company Profile (excerpt from Reuters): The Williams Companies, Inc., incorporated on February 3, 1987, is an energy infrastructure company. The Company is focused on connecting North America’s hydrocarbon resource plays to markets for natural gas, natural gas liquids (NGL), and olefins. As of December 31, 2016, the Company’s interstate gas pipelines, midstream and olefins production interests were held through its investment in Williams Partners L.P. (WPZ). The Company’s segments include Williams Partners, Williams NGL & Petchem Services and Other. The Williams Partners segment includes its consolidated master limited partnership, WPZ. The Williams NGL & Petchem Services segment includes its Texas Belle pipeline and certain other domestic olefins pipeline assets. Other segment includes its corporate operations and Canadian construction services company.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of WMB – January 2019

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

 

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $30,487,499,623 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.72 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -436.84% Fail
6. Moderate PEmg Ratio PEmg < 20 29.71 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.52 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.72 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -27.55 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $0.85
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $12.30
MG Value based on 0% Growth $7.21
Market Implied Growth Rate 10.60%
Current Price $25.19
% of Intrinsic Value N/A

Williams Companies Inc does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability or growth over the last ten years, and the high PEmg ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings stability or growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $1.37 in 2014 to an estimated $0.85 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 10.6% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Williams Companies Inc revealed the company was trading above its Graham Number of $11.58. The company pays a dividend of $1.2 per share, for a yield of 4.8%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 29.71, which was below the industry average of 41.28, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-27.56.

Williams Companies Inc scores quite poorly in the ModernGraham grading system, with an overall grade of D+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$27.56
Graham Number $11.58
PEmg 29.71
Current Ratio 0.72
PB Ratio 1.52
Current Dividend $1.20
Dividend Yield 4.76%
Number of Consecutive Years of Dividend Growth 0

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Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $1,984,000,000
Total Current Liabilities $2,761,000,000
Long-Term Debt $21,409,000,000
Total Assets $47,153,000,000
Intangible Assets $8,324,000,000
Total Liabilities $30,194,000,000
Shares Outstanding (Diluted Average) 1,023,587,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.51
Dec2017 $2.62
Dec2016 -$0.57
Dec2015 -$0.76
Dec2014 $2.92
Dec2013 $0.62
Dec2012 $1.37
Dec2011 $0.63
Dec2010 -$1.88
Dec2009 $0.49
Dec2008 $2.40
Dec2007 $1.63
Dec2006 $0.51
Dec2005 $0.53
Dec2004 $0.31
Dec2003 -$1.01
Dec2002 -$1.64
Dec2001 -$0.95
Dec2000 $1.17
Dec1999 $0.35
Dec1998 $0.28

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.85
Dec2017 $1.00
Dec2016 $0.37
Dec2015 $0.87
Dec2014 $1.37
Dec2013 $0.48
Dec2012 $0.47
Dec2011 $0.24
Dec2010 $0.24
Dec2009 $1.23
Dec2008 $1.43
Dec2007 $0.76
Dec2006 $0.13
Dec2005 -$0.22
Dec2004 -$0.54
Dec2003 -$0.78
Dec2002 -$0.50

Recommended Reading:

Other ModernGraham posts about the company

Williams Companies Inc Valuation – March 2018 $WMB
Williams Companies Inc Valuation – June 2016 $WMB
34 Companies in the Spotlight This Week – 2/7/15
Williams Companies Annual Valuation – 2015 $WMB
15 Companies in the Spotlight This Week – 2/1/14

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Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

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