NEW YORK (TheStreet) -- Shares of DryShips (DRYS) - Get Report rose 5.94% to $1.07 in afternoon trading Thursday after the company's majority-owned subsidiary, Ocean Rig UDW, entered into an agreement with ENI Angola S.p.A.
DryShips announced Thursday that some of Ocean Rig's subsidiaries have entered into an Omnibus agreement with ENI Angola S.p.A. ENI has also exercised its option to extend the contract for the drillship Ocean Rig Poseidon for another year until the second quarter of 2017.
The total contract backlog of Ocean Rig has increased by approximately $187 million thanks to the agreement.
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More than 6.8 million shares had changed hands as of 3:44 p.m., far less than the daily average volume of 13,522,400.
Separately, TheStreet Ratings team rates DRYSHIPS INC as a "hold" with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate DRYSHIPS INC (DRYS) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and a generally disappointing performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 24.9%. Since the same quarter one year prior, revenues rose by 48.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
- DRYSHIPS INC reported significant earnings per share improvement 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 year. 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 -$0.58 versus -$0.64 in the prior year. This year, the market expects an improvement in earnings ($0.04 versus -$0.58).
- The gross profit margin for DRYSHIPS INC is rather high; currently it is at 57.64%. 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 2.76% trails the industry average.
- 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 77.45%, 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.
- The debt-to-equity ratio is very high at 2.21 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, DRYS has a quick ratio of 0.53, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
- You can view the full analysis from the report here: DRYS Ratings Report