Tidewater Inc.: High Margins, Low Debt

About: Tidewater, Inc. (TDW)
by: Todd Chalem

One of the names I screened earlier this week has caught my eye: Tidewater Inc. (NYSE:TDW). TDW provides supply vessels and marine support services to the offshore energy industry.

P/B: 2
P/S: 3.3
Cash Flow/Enterprise Value: 11.9%
Yield: .9%
Net Margin: 31.75%
ROE: 19%
PEG Ratio: .18

I have not been a huge energy investor during the last three years. That said, the biggest win in my portfolio is Holly Corp. (HOC), a small refiner and marketer. I bought that in mid-2004 and still hold it. A major refinery hasn't been built in the U.S. since 1976 and it takes decades for one to be approved, built and become profitable, so HOC is still a good bet despite its run.

TDW has little debt and healthy cash flow. Margins are among the highest in its industry, and debt levels are among the lowest. Insiders hold a touch over $25,000,000 of common stock and have sold nearly $40,000,000 worth since the beginning of 2007, at a weighted average price of $62.95 . TDW has several large competitors (Transocean (NYSE:RIG), GlobalSantaFe Corporation (NYSE:GSF), Nabors Industries (NYSE:NBR) and ENSCO International (NYSE:ESV)) in a business that require scale (boats, docks, repair and maintenance facilities, etc.). I'm not in any hurry to get long, but it's on my watchlist.

Disclosure: none

TDW 1-yr chart