Wed. Oct 4th, 2023
    Is Oceaneering International Inc Overvalued? A Comprehensive Analysis

    Oceaneering International Inc (NYSE:OII) has been experiencing a steady increase in its stock price, with a daily gain of 2.68% and a 3-month gain of 40.69%. However, despite a promising Earnings Per Share (EPS) of 0.64, investors are questioning whether the stock is significantly overvalued. This article aims to provide an in-depth analysis of Oceaneering International’s valuation, examining its financial strength, profitability, and growth prospects.

    Oceaneering International Inc is a global provider of engineered services and products, specializing in robotic solutions for the offshore energy, defense, aerospace, manufacturing, and entertainment industries. The majority of its products are targeted towards the offshore oil and gas market. The current stock price stands at $25.29, with a market cap of $2.50 billion. However, when compared with its GF Value of $15.2 (a proprietary measure of intrinsic value), it becomes apparent that Oceaneering International’s stock is significantly overvalued.

    The GF Value represents the current intrinsic value of a stock and is calculated based on historical multiples, past returns and growth, and future business performance estimates. According to GuruFocus’ valuation method, Oceaneering International’s stock is significantly overvalued. This indicates that the potential return on investment in the long-term is likely to be lower than its future business growth.

    Investing in companies with low financial strength poses a risk of permanent capital loss. Oceaneering International has a cash-to-debt ratio of 0.53, which is better than 50.15% of companies in the Oil & Gas industry. GuruFocus ranks the company’s financial strength as 6 out of 10, suggesting a fair balance sheet.

    Profitability and growth are crucial factors in the valuation of a company. Oceaneering International has been profitable for 6 out of the past 10 years. However, its operating margin of 7.4% ranks worse than 52.95% of companies in the Oil & Gas industry, indicating poor profitability. In terms of growth, Oceaneering International’s 3-year average revenue growth rate is worse than 70.71% of companies in the same industry. Its 3-year average EBITDA growth rate is 0%, ranking worse than 0% of companies in the Oil & Gas industry.

    Another measure of profitability is the comparison of return on invested capital (ROIC) and the weighted average cost of capital (WACC). Oceaneering International’s ROIC for the past 12 months is 7.21, while its WACC is 13.34.

    In conclusion, Oceaneering International Inc is significantly overvalued. While the company’s financial strength is fair, its profitability is poor, and its growth prospects rank lower than the majority of companies in the Oil & Gas industry. Investors should carefully consider these factors before making any investment decisions.

    – GuruFocus (
    – Oceaneering International Inc (company website)