Star Bulk Carriers
, a Greek dry-bulk cargo shipping line, reported a lower-than-expected profit Thursday, sending its shares went tumbling in response.
The stock was changing hands in morning trading at $4.90, down 47 cents, or 8.75%, on heavy volume. The stock had been on a tear of late, more than quadrupling since hitting its lows in March.
Excluding items, Star Bulk, based in Athens, reported earnings of 16 cents a share, below analysts' estimates of 25 cents. Those non-cash items included an $11 million gain, or 18 cents a share, on the early termination of a charter contract. Though ships returned early do boost the company's bottom line with one-time gains, they also reduce operating income.
Revenue came in at $45 million, up 8% from a year ago, mostly because Star Bulk increased the size of its fleet from 2008. The top line also disappointed. According to a Thomson Financial survey, analysts were looking for revenue of about $54 million.
As a way to deal with declining demand, Star Bulk said it will drydock one of its ships in the second quarter, and will do the same to two more later in the year.
The news out of Star Bulk wasn't all bad, however. Omar Nokta, an analyst at Dahlman Rose, which makes a market in Star Bulk stock, wrote in a research note Thursday morning that recently renegotiated charter contracts by the shipper have reduced the risk of early returns. "We find these new contract terms attractive, extending the earnings visibility of the fleet and allowing it to benefit in market upside," he wrote.
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