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Cal Dive International - Bobbing For Apples

|Includes: Cal Dive International, Inc. (DVR)

Cal Dive International, Inc. - (Reviewed 12/31/2013)
Cal Dive International, Inc. (NYSE: DVR) - Sell based on a recent price of $2.02 and a fair value estimate of $12-$14.

The company is a marine contractor which provides manned diving, pipelay and pipe burial, platform installation and platform salvage services to its customer in the offshore oil and natural gas industry.

While a fair value estimate for the stock is $12-$14, the simple fact of the matter is the markets will never allow the stock price to move that high as long as current management puts forth no improvement plan for the company's fortunes.

The company invests nothing in itself as evidenced by CAPEX expenditures of $0, while all of the company's fiscal 2012 were generated through taxes. In addition, y-o-y operating cash flow fell 14% and y-o-y free cash flow fell 14%. To compensate, management allowed debt to grow by 10%. Outstanding.

What I found so incredible about this stock was that the markets have increase the one-year ago price by 20% while y-o-y sales fell 3%, y-o-y EBITDA fell 55%, and y-o-y cash on hand fell 47%, all of which point to a ship that is sinking faster than her pumps can pump.

My advice? Smash your hand in a car door, it would be a more pleasurable experience than owning this stock.

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Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.