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I understand that. The whole idea for me is to find these companies while they're "under the radar". The difficult part for most is being patient until these are uncovered by the larger market. I'll continue to add at anything < $3.
Backlog of $31 mill and market cap of only $33.6 mill. In the article I posted, my research indicated the average market cap to backlog ratio for the industry is around 4.3x.
Also, having 9 month trailing EPS of $0.15 and trading at only $2.20 puts the PE at 15x. Assuming TTM at year end is $0.18, this puts the PE even lower at 12x. Any way you want to look at this I still think the PPS is significantly under-priced.
Ok, thanks. So would you say that the $27 mill backlog Ron reported in Q3 is all that is binding and quantifiable?
So basically the $3.7 mill is deemed to be "ok" under SEC reporting requirements which the company could announce? But it's likely to be part of a larger contract which the difference of ($15.3 mill = $19 mill - $3.7 mill) did not meet those same SEC requirements?
NEWS! Deep Down Receives Orders Totaling $3.7 Million
HOUSTON, Nov. 19, 2013 /PRNewswire/ -- Deep Down, Inc. (OTCQX: DPDW) ("Deep Down"), an oilfield services company specializing in complex deepwater and ultra-deepwater oil production distribution system support services announced today it has received orders for Steel Tube Flying Leads and associated services in the Gulf of Mexico and West Africa.
(Logo: http://photos.prnewswire.com/prnh/20121204/LA23242LOGO)
The first order is for fourteen (14) steel flying leads and ancillary equipment. Delivery is scheduled for deployment in over 5,300 feet (1,615 meters) of water in the Gulf of Mexico in the second quarter of 2014. The second order is a long-term contract to supply flying lead installation support equipment and personnel; equipment and personnel will be mobilized in West Africa within the first few weeks of 2014 through the end of the third quarter of 2014.
Ron Smith, Chief Executive Officer of Deep Down, Inc. (DPDW) stated, "The confidence expressed in Deep Down to manufacture flying leads and furnish equipment and services on a long-term basis reaffirms the continuing interest that our products and services are generating in the deepwater domestic and international marketplaces."
Hoping we will hear about that large steel flying leads order sometime soon. I take it the customer is waiting for DPDW to secure the LC before putting the purchase order in.
Not really. Maybe I don't understand each of your opposition towards management? The company is profitable, cash flow positive, positive EBITDA, growing backlog, ect. And if you listened to the CC you'd get the impression that the company is headed in a positive direction going in to FY2014.
Scooped up some more shares today. Bottom line to me is a) EPS of $0.15 for trailing 9 months, b) backlog is building, c) volume of bids/quotes is increasing, d) they're in a growing industry, e) financially healthy (positive EBITDA & 4.78 current ratio).
FY2013 EPS will probably be anywhere between $0.15 & $0.20. Using the average PEx ratio for Dril-Quip, Oceaneering, and FMC Technologies, which is 27x, DPDW PPS should be in the range of $4.00 to $5.40.
Very undervalued at the current PPS!
But, $12 billion?? How can you honestly value something without providing tangible evidence its there?
I'm not doubting his mariner skills. I'm doubting his rational.
Delusional.
Very good CC.
Slide number 16 really has me anxious to see these Q3 results. We would need to see a significant boost in net income for the company to meet their lower net income projection of $4.6 million for FY2013. This could be a good or bad sign. Bad if the company is overly optimistic. However, the investor presentation was put together in August, halfway thru Q3. So, surely management had a reasonably accurate foresight at Q3 results at that time.
Let's assume they hit the NI target of $4.6 mill, or come close. This would add further argument to the stock being severely undervalued.
$4.6 million NI/ 15.275 million shares O/S = $0.30 EPS
$0.30 EPS x 25 PEx = $7.53 PPS
$0.30 EPS x 20 PEx = $6.00 PPS
Slide 16... http://b2icontent.irpass.cc/2086%2F148305.pdf?AWSAccessKeyId=1Y51NDPSZK99KT3F8VG2&Expires=1384295310&Signature=PsrZkDmoRLLtp2uRFjqsn6mKCZk%3D
The $300k was on the sell side. Held at $2.30 so at least it wasn't dumped on the bids.
Q-10 should be Thursday after the close.
http://www.edgarfilings.biz/calendar/calendar.pdf
Good WSJ article on the growth of the subsea industry:
http://online.wsj.com/news/articles/SB10001424052702303442004579123560225082786
I haven't been paying much attention to the short interest. I'm a little surprised there would be growing short interest in a company that's undervalued.
Looking forward to seeing Q3 results next week.
Penny stock?
We could possibly get an update on recent developments or announcement of a new director to the board next week when Q3 is released. The PP was filed on Sept.13 so I believe they have about 30 days from next week to announce the new board member.
Q3 Revenue & EPS expectations anyone??
I'm expecting revenues to be >= $11 million and EPS of $0.06.
All the majors in the subsea industry that have released earnings for Q3 have reported revenue growth from 17%-20% over the same period in 2012. My revenue expectation represents a 17% increase.
I set EPS based on net income of 8%. I'd expect higher operating expenses considering the additional warehouse space and increase in production capacity that will require funding. Add on top of that $294k the company had to pay as a finder's fee for the PP.
lol. That's a pretty broad statement.
You'd almost have to think there was a buyer lined up to absorb that big chunk.
Wow! 180k!
I agree but gotta stay patient. I learned my lesson after getting frustrated with PFIE. I bought in at $1.35 and watched it trade sideways for 5-6 months. I got frustrated and sold out. Check out what has happened in the last 3 months.
http://stockcharts.com/h-sc/ui?s=pfie
I'm just going to keep adding to my position in DPDW. After going thru some growing pains, I think they're in a more stabilized position. Subsea industry is expected to grow at 20% per year for the next 3 years. This is my investment horizon with DPDW.
Not much shorting as a percentage of total O/S.
DRQ jumping this morning on Oceaneering International's Q-3 earning release.
More positive news coming out of the industry today. Ride the coat-tail of this growth in the industry DPDW.
Oceaneering International, Inc. reported record earnings for the third quarter ended September 30, 2013. On revenue of $853 million, Oceaneering generated net income of $104.4 million, or $0.96 per share.
For the third quarter of 2012, Oceaneering reported revenue of $734 million and net income of $84.4 million, or $0.78 per share. For the second quarter of 2013, Oceaneering reported revenue of $820 million and net income of $98.8 million, or $0.91 per share.
Sequentially, quarterly EPS was 5% higher on operating income improvements from Remotely Operated Vehicles (ROV) and Subsea Projects. Year over year, quarterly EPS increased by 23% on operating income improvements from all business segments.
M. Kevin McEvoy, President and Chief Executive Officer, stated, “We achieved record EPS for the quarter, demonstrating the high level of demand we are experiencing for our subsea services and products. Our results were highlighted by all-time high operating income from our ROV business and better than anticipated Subsea Products operating margin.
“Overall, we remain on track to achieve record EPS for 2013, which we now believe will be up more than 25% over 2012. Given our third quarter results and an improved fourth quarter outlook for Subsea Products and Subsea Projects, our new annual guidance range is $3.35 to $3.40, up from $3.20 to $3.35. For the fourth quarter of 2013, we are projecting EPS of $0.80 to $0.85.
“Compared to the second quarter of 2013, ROV operating income increased on higher global demand to support drilling and vessel-based projects. Our ROV days on hire for the quarter increased to a record high of nearly 23,700 and our fleet utilization rate rose to 86%. During the quarter we put seven new vehicles into service and transferred one system to Advanced Technologies for non-oilfield use. At the end of September we had 302 vehicles in our fleet, compared to 285 one year ago. Subsea Projects operating income increased due to a seasonal uptick in U.S. Gulf of Mexico demand for deepwater intervention and shallow water diving services and additional vessel activity offshore Angola.
“Subsea Products operating income was flat with the second quarter of 2013, and was better than we had anticipated due to a higher contribution from tooling. Products backlog at quarter-end was $857 million, down 5% from our June 30 backlog of $902 million and up 38% from $619 million one year ago.
“We are initiating 2014 EPS guidance with a range of $3.90 to $4.10, up 19% at the midpoint over our forecast for 2013. For our services and products, we anticipate continued global demand growth to support deepwater drilling, field development, and inspection, maintenance, and repair activities. This market outlook is supported by industry observations and assessments that deepwater drilling is increasing, subsea equipment orders are growing, and backlog to perform offshore construction projects is at a historically high level.
“Compared to 2013, we anticipate all of our oilfield segments will have higher operating income in 2014, notably: ROV on greater service demand to support drilling and vessel-based projects, led by increased activity off Africa; Subsea Products on higher demand for each of our major product lines; and Subsea Projects on growth in deepwater intervention service activity in the U.S. Gulf of Mexico and additional work offshore Angola.
“Our liquidity and projected cash flow provide us with ample resources to invest in Oceaneering’s growth. At the end of the quarter, our balance sheet reflected $102 million of cash, $40 million of debt, and $2.0 billion of equity. We generated EBITDA of $204 million during the quarter and $559 million year to date. For 2013 and 2014, we anticipate generating EBITDA of at least $735 million and $845 million, respectively.
“Looking beyond 2014, we believe that the oil and gas industry will increase its investment in deepwater projects. Deepwater remains one of the best frontiers for adding large hydrocarbon reserves with high production flow rates at relatively low finding and development costs. With our existing assets, we are well positioned to supply a wide range of the services and products required to support the safe deepwater efforts of our customers.”
A good indication is no "dumpage" since the PP. I think Q-3 results will determine if we drop to the $1.80 PP level or surpass $2.50-$2.70 range.
The spread between the PPS and 50 Day MA is closing. Based on the 1 year chart, we could see another jump in the PPS soon if this trend continues.
Maybe this Saturday or Sunday I'll drive over to their new facility and snatch a few pictures. It's only about 30 minutes from where I'm at.
Yes, volume has been relatively high so far today. Nice consolidation at this level.
10-Q should be coming in 3 weeks.
WOW! There's a 20k bid at 2.50. The MM is E-Trade so it might be retail buying.
FMC released their earnings yesterday. Although their EPS fell short of expectations, the CEO made positive comments on the growth of their subsea division
"Subsea Technologies has achieved a record backlog of $6.5 billion as we inbounded $1.7 billion of awards in the third quarter," said John Gremp, Chairman and CEO of FMC Technologies. "Although Subsea Technologies has delivered four consecutive quarters of greater than $1 billion of revenue, our margins for the quarter were disappointing. We are addressing the isolated causes of our shortfall and expect margins to improve going forward.
Subsea Technologies third quarter revenue was $1.1 billion, up 20 percent from the prior-year quarter.
Subsea Technologies operating profit was up 10 percent from the prior-year quarter to $121.1 million as a result of volume growth.
Subsea Technologies inbound orders for the third quarter were $1.7 billion and backlog was $6.5 billion."
I'd sure like to hear something from the company. Some form of update other than a few comments from Ron on the 10-Q.
Nice bid support at $2.50. 8.1k shares
Huh? You mean take out the ask at $2.60?
"Transocean - The deepwater drilling company will replace Dell in the S&P 500 after the close on Oct. 28. Shares of Transocean shot higher in extended-hours trading, while Dell traded flat."
Good news for the offshore industry.
I still think anything less than $3 is a good buy. My price target is $4-$5 once the street catches on to this one.
FY2013 EPS Low Estimate = $0.15 ($34 mill revenue x 8% PM/ 15.2 mill O/S) x 25x P/E = $3.75 PPS
FY2013 EPS High Estimate = $0.20 ($38 mill revenue x 8% PM/ 15.2 mill O/S) x 25x P/E = $5.00 PPS
What will largely determine the PPS is the P/E the market assigns to the company. For all the subsea/offshore companies that I've seen, 25x appears to be around the industry average.
Thank you!