NEW YORK (TheStreet) -- Shares of DryShips (DRYS) - Get DryShips Inc. Report were gaining 1.2% to 82 cents a share after-hours Monday after the shipping company announced plans to sell its tanker fleet.
DryShips said it will sell four Suzemax tankers through a subsidiary to entities controlled by CEO George Economou. The deal for the Suzemax tankers is for about $245 million.
The company also announced a potential deal to sell six Aframax tankers. DryShips said it could sell the six Aframax tankers for up to $291 million. The agreements for the tankers are not effective until the purchaser confirms their unconditional acceptance by June 30.
"We are pleased to announce the sales of our four Suezmax tankers," CFO Ziad Nakhleh said in a statement. "Net of the repayment of associated secured bank debt, these transactions are expected to generate approximately $125 million in free cash which will be used to prepay an amount under our ABN AMRO Bridge Loan which has a balance of $185 million as of today, as well as for general corporate purposes."
TheStreet Ratings team rates DRYSHIPS INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate DRYSHIPS INC (DRYS) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. Among the areas we feel are negative, one of the most important has been a generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- DRYS's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 73.92%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Marine industry and the overall market, DRYSHIPS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The net income growth from the same quarter one year ago has exceeded that of the Marine industry average, but is less than that of the S&P 500. The net income increased by 1.5% when compared to the same quarter one year prior, going from -$24.37 million to -$24.00 million.
- The gross profit margin for DRYSHIPS INC is rather high; currently it is at 57.50%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -4.01% is in-line with the industry average.
- DRYSHIPS INC has improved earnings per share by 33.3% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, DRYSHIPS INC continued to lose money by earning -$0.09 versus -$0.58 in the prior year. This year, the market expects an improvement in earnings ($0.09 versus -$0.09).
- You can view the full analysis from the report here: DRYS Ratings Report