NEW YORK (
-- Safe Bulkers
) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
Highlights from the ratings report include:
- The revenue growth significantly trails the industry average of 66.1%. Since the same quarter one year prior, revenues slightly increased by 3.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The gross profit margin for SAFE BULKERS INC is currently very high, coming in at 81.10%. Regardless of SB's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, SB's net profit margin of 54.90% significantly outperformed against the industry.
- SAFE BULKERS INC's earnings per share declined by 29.8% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, SAFE BULKERS INC reported lower earnings of $1.29 versus $1.75 in the prior year. This year, the market expects an improvement in earnings ($1.39 versus $1.29).
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Marine industry and the overall market, SAFE BULKERS INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
- The share price of SAFE BULKERS INC has not done very well: it is down 19.47% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.
Safe Bulkers, Inc. provides marine drybulk transportation services worldwide. The company transports various bulk cargoes, primarily coal, grain, and iron ore. As of October 7, 2011, it had a fleet consisted of 17 drybulk vessels. The company has a P/E ratio of 5.1, above the average transportation industry P/E ratio of 4.8 and below the S&P 500 P/E ratio of 17.7. Safe Bulkers has a market cap of $486.3 million and is part of the
industry. Shares are up 26.4% year to date as of the close of trading on Thursday.
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-- Written by a member of TheStreet RatingsStaff