Nice spread from barrons On-Line:
Another small oil service company that some say stands out from the crowd is Trico Marine Services, Inc., the second largest provider of supply boats in the Gulf of Mexico.
That's because Trico Marine shares have been beaten down to a "ridiculous" multiple of seven times First Call's mean earnings estimates of $2.75 per share for 1998 and only six times the $3.46 per share consensus for next year, asserts James Kaplan, a fund manager at J.L. Kaplan Associates in Boston. (When was the last time you've seen single-digit P/E ratios for anything?) Wednesday, the stock closed at $20 5/16, way below its 52-week high of 45 1/2.
Kaplan's fund recently bought more than 400,000 shares of the company, and he isn't the only one who sees value there. Last month, Michael Price's Mutual Shares fund (owned by Franklin Resources) disclosed that it owned 1.88 million shares of Trico, a bit more than 10% of the company's outstanding stock. And Trico Marine insiders -- who were net sellers of stock when it was flying high -- began buying shares of the company this month, too.
Kaplan claims that Trico Marine is selling at too big a discount to the group's bellwether, Tidewater, which trades at 11x 1998 estimated earnings and at ten times the consensus for next year. "[If] you sold off Trico Marine's boats one by one at current prices, you'd get a value of $32 per share for the company, " Kaplan asserts.
Of course, nobody's planning to do that soon. And if the production agreement doesn't hold up, oil service companies are bound to be decimated in a new wave of price cutting. But if the going doesn't get too rough, Tesco and Trico Marine could offer some opportunities for investors who aren't afraid of what could be a rocky ride.
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