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Is Tidewater Inc’s (NYSE:TDW) Balance Sheet A Threat To Its Future?

While small-cap stocks, such as Tidewater Inc (NYSE:TDW) with its market cap of US$766.26M, are popular for their explosive growth, investors should also be aware of their balance sheet to judge whether the company can survive a downturn. Companies operating in the Energy Services industry, in particular ones that run negative earnings, are inclined towards being higher risk. So, understanding the company’s financial health becomes crucial. Here are a few basic checks that are good enough to have a broad overview of the company’s financial strength. Nevertheless, I know these factors are very high-level, so I’d encourage you to dig deeper yourself into TDW here.

Does TDW generate enough cash through operations?

Over the past year, TDW has reduced its debt from US$2.04B to US$448.16M , which comprises of short- and long-term debt. With this reduction in debt, the current cash and short-term investment levels stands at US$433.82M for investing into the business. Moving onto cash from operations, its small level of operating cash flow means calculating cash-to-debt wouldn’t be too useful, though these low levels of cash means that operational efficiency is worth a look. As the purpose of this article is a high-level overview, I won’t be looking at this today, but you can examine some of TDW’s operating efficiency ratios such as ROA here.

Can TDW pay its short-term liabilities?

With current liabilities at US$220.13M, it appears that the company has been able to meet these commitments with a current assets level of US$845.18M, leading to a 3.84x current account ratio. Though, anything about 3x may be excessive, since TDW may be leaving too much capital in low-earning investments.

NYSE:TDW Historical Debt Apr 14th 18
NYSE:TDW Historical Debt Apr 14th 18

Is TDW’s debt level acceptable?

With debt reaching 43.85% of equity, TDW may be thought of as relatively highly levered. This is not unusual for small-caps as debt tends to be a cheaper and faster source of funding for some businesses. Though, since TDW is presently unprofitable, sustainability of its current state of operations becomes a concern. Running high debt, while not yet making money, can be risky in unexpected downturns as liquidity may dry up, making it hard to operate.

Next Steps:

TDW’s cash flow coverage indicates it could improve its operating efficiency in order to meet demand for debt repayments should unforeseen events arise. However, the company will be able to pay all of its upcoming liabilities from its current short-term assets. This is only a rough assessment of financial health, and I’m sure TDW has company-specific issues impacting its capital structure decisions. I recommend you continue to research Tidewater to get a better picture of the stock by looking at:


To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.

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