But first-quarter profit, scheduled to be released May 26, may mark a trough, creating an opening for investors to get in on a shipping boom fueled by a global economic recovery. Nevertheless,
conservative stock model has downgraded Athens, Greece-based Diana Shipping to "hold."
World trade declined 14% last year, pressuring charter prices. Now as demand for commodities is strengthening, ports from Australia to Brazil are clogged with ships carrying iron ore, coal and grains.
Diana Shipping has lagged behind most of its publicly traded competitors. The stock is little changed this year, trailing the 20% increase of
, the 16% gain in
CMB Cie Maritime
and the 13% return of
STX Pan Ocean
. Over the past year, Diana Shipping has lost 5% of its value, while the
Bloomberg Dry Ships Index
has risen 16%.
As Diana's earnings are heading toward a low for the recent economic cycle, analysts see upside in the company's shares. If their predictions prove accurate, now could be the ideal time to purchase the stock.
Of analysts covering Diana, 12, or 60%, advise purchasing its shares, five recommend holding and three suggest selling them.
offers a lofty price target of $22, leaving a potential 57% return.
predicts that the stock will rise 43% to $20 and
expects it to touch $19.
rates Diana "overweight" with an $18 price target.
Lazard Capital Markets
is also bullish.
Considering Diana has a market value of $1.1 billion, placing it in the small-cap category, it is unusual for so many sell-side firms to cover its shares. The firms do so for two reasons: Diana is an important bellwether for the broader economy, and analysts expect the company's stock to do well. During the fourth quarter, 12 of Diana's 20 largest shareholders purchased more stock, four held steady and four decreased their holdings.
The stock sells for a price-to-earnings ratio of 8.7, a price-to-projected-earnings ratio of 8.8 and a price-to-book ratio of 1.1, reflecting 56%, 34% and 8% discounts to peer averages. But it's expensive based on sales and cash flow. One encouraging metric is return on equity, a key measure of profitability for investors. The figure narrowed from 29% to 12% in the latest quarter, but still exceeded the industry average of 11% and the
average of 10%.
-- Reported by Jake Lynch in Boston.
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