Thursday, October 17, 2013

Seeking Alpha: Cal Dive Seems To Be Fighting The Tides

Offshore diving and construction specialist Cal Dive (DVR) is an interesting story. The company's low stock price (close to $2 a share) catches an investor's attention, as does the fact that the shares trade below tangible book value and that there is a sizable short interest in the shares. If Cal Dive can drive better vessel utilization and reap the margin improvements that should come with it, Cal Dive is the sort of story that could spike fairly quickly.

The problem is that I'm not sure how likely that is. Recent awards have swollen the backlog to levels not seen in years, but it remains to be seen just how much they will improve utilization and margins - with weak pricing in the market, did Cal Dive have to surrender margins to secure revenue and cash flow? I'm also concerned that the company is fighting a losing battle with technology as remotely operated vehicles (ROVs) owned by Oceaneering (OII), Helix (HLX), and Saipem (SAPMY.PK) take share away from diving, while energy companies move exploration and production activity from the shallow waters and into the deep.

Follow this link for the full article:
Cal Dive Seems To Be Fighting The Tides

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